Data Centers

Data Centers are required because of the increasing use of data. There is massive growth of internet and mobile usage. The government also insists on localization of data (a regulatory thrust). There is the rising usage of AI. There is a need for lower latency. These are some factors that have created a big demand for data centers. The data centers have received infrastructure status.

Data centers accommodate in-house computer servers, IT infrastructure and network equipment. They power everything from ChatGPT to queries to EVs and streaming services.

India’s share of the global data generated is about one fifth. However, it owns just 3 per cent of global data center capacity. India at present has 276 data centers and is ranked seventh in the world. Just behind France and Canada. By 2030, it is estimated that India’s data center capacity will be 5x. It will be 8GW. The sector shows a CAG of 20-22 per cent. By 2028, India will consume the most data. ChatGPT’s user base in India is the second largest in the world.

India has prepared a draft of National Data Center policy which proposes a conditional tax exemption of up to 20 years for data center developers.

India has an IT load of 1.7 GW plus. THe IT load represents the total electricity consumed by computing equipment. The IT load will increase to about 3 per cent by 2030 on account of growth in data center capacity from 1.4 GW in 2024 to 8-9 GW in 2030. The challenge is to meet the demand sustainably. The answer is to generate renewable energy and battery storage.

India is also a water-stressed country since India holds 18 per cent of world’s population and only 4 per cent of its water resources. India’s data center water consumption in 2025 is 150 billion liters. It will increase to 358 billion liters by 2030. It will put further pressure on its water table.

The industry is now concentrated along the western and southern coasts. Vizag project of Google will expand capacity along the eastern coast. India will then become a regional hub for cloud and AI infrastructure. There could be a risk of salination due to over-extraction of ground water.