Data centre policy: Centre plans dedicated framework amid rising power demand

Projects are approved under existing environmental regulations and building rules, while several states offer incentives to attract investment in the sector.

India is preparing a dedicated policy for data centres as the government seeks to attract investment in the sector while ensuring that rising electricity demand does not increase power costs for consumers.

Junior IT Minister Jitin Prasada announced the proposed policy on Wednesday at an event organised by the Central Electricity Authority in New Delhi. However, he did not specify what the policy would cover or when it would be introduced.

"India is a very fertile ground for hyperscale data centres," Prasada said, highlighting the country's potential to emerge as a major hub for large-scale data storage and computing infrastructure.

The minister also pointed to concerns in some countries where data centres are drawing electricity away from other consumers, leaving them with higher power bills. "We don't want to get into that," he said.

Why is India planning a dedicated data centre policy?

India currently does not have a separate policy specifically governing data centres. Projects are approved under existing environmental regulations and building rules, while several states offer incentives to attract investment in the sector.

The proposed framework comes as the government seeks to expand India's data centre capacity amid growing demand for cloud computing, artificial intelligence (AI) and digital services. At the same time, the increasing electricity and water requirements of these facilities have raised concerns about their impact on local communities and resources.

Amazon, Google projects face local opposition

The announcement comes amid protests and environmental concerns surrounding major data centre projects planned by Amazon and Google.

Residents living near Amazon's proposed site outside Mumbai have raised concerns about the project's potential impact on electricity and water supplies, as well as noise pollution.

In Visakhapatnam, environmentalists have alleged that Google's proposed $15 billion project could threaten local wildlife and raised concerns over the use of temple land.

Both companies have rejected the allegations, maintaining that the concerns are unfounded. They have also said their facilities use advanced technologies to minimise resource consumption.

India eyes $200 billion data centre opportunity

Data centres have become a key part of the government's efforts to attract investment and strengthen India's digital infrastructure.

Prime Minister Narendra Modi has invited "the whole world's data to reside in India", as the government positions the country as a global destination for data storage and computing facilities.

The government sees the data centre sector as a potential $200 billion opportunity. Global technology companies, including Google, Microsoft and Amazon, have been investing in India to expand their cloud computing and AI infrastructure.

However, the proposed policy is expected to address the challenge of balancing the sector's rapid expansion with concerns over electricity consumption and its potential impact on consumers. The government has yet to disclose further details about the framework or its expected timeline.

(With inputs from news agency Reuters)

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