States asked to assess resources before clearing data centres

States should assess the availability of electricity, water, land and supporting infrastructure before approving data centre projects, says a new framework released by NITI Aayog on Wednesday, which aims to help states balance investment with long-term sustainability as digital infrastructure expands across the country.

The framework -- titled ‘Data Centre Evaluation Framework to Help States Plan for Sustainable Growth’ has been developed by the NITI Frontier Tech Hub and was launched by NITI Aayog member Prof Abhay Karandikar alongside Niti Aayog CEO Anurag Jain.

The framework sets out five pillars for evaluating projects — power and energy; water and cooling; siting and environmental sustainability; economic and strategic value; and policy, governance and implementation which will have to be overseen individually, before finalising data centre plans.

On the power and energy pillar, the framework calls for states to assess electricity demand across an entire campus, including future expansion, and verify whether substations and transmission infrastructure can meet the load. For facilities above 20 megawatts, it recommends automated demand-response readiness and integration with state load dispatch centre systems, subject to applicable grid-code requirements.

On water, the framework calls for assessments of long-term availability, competing demand and the impact on existing users. It recommends preparing a “20-30 year seasonal catchment water balance” covering surface water, groundwater, municipal supply, treated wastewater and competing demand, particularly agriculture.

In areas facing water stress, the framework calls for focus on not straining existing freshwater sources further.

“Where basin stress precludes additional freshwater abstraction, require desalinated water where feasible; do not allow the project to further strain existing freshwater resources,’ the framework states, which has been prepared with Deloitte India and consultations with the Ministry of Electronics and Information Technology, the Ministry of Power and the Department for Promotion of Industry and Internal Trade.

Under the pillar on siting and environmental sustainability, the framework recommends that states designate data-centre-ready zones and prioritise renewable-energy-rich zones with available connectivity where this limits long-distance transmission. It also calls for states to mark-out the exclusion or high-risk zones (Red zone) -- where development should be restricted because of hazard exposure, water stress, land-use conflicts or inadequate supporting infrastructure.

“Assess forward-looking coastal, flood, cyclone, seismic, heat and ecological risk, not only current hazard maps,” the framework adds, stating community impact assessments should cover water, traffic, emissions, noise, waste and local employment.

On economic benefits, the framework asks states to assess the value net of State support and pay only for measurable outcomes. It recommends linking incentives to outcomes such as employment, domestic procurement, skills development, renewable energy use and resource efficiency, with payments tied to specified milestones.

Karandikar said while the framework aims to help states at the evaluation stage, however, a number of the measures suggested also look at long-term planning.

The report further recommends a digital single-window system to coordinate approvals and track clearances. NITI Aayog in the framework clarifies it is intended to support decision-making, but not prescribe a uniform approach or create an additional layer of regulation. “States can apply the common assessment principles in line with their priorities, resource availability and development objectives.”