Data Centres In India
Source: PIB
GS III: Science and Technology
Overview
- India’s data-centre capacity is expanding rapidly, driven by digitalisation, AI, cloud computing, e-governance and digital payments.
- Government initiatives and investment are supporting the development of data-centre and digital infrastructure.
- Rising capacity also brings challenges related to energy consumption, water use, cooling, cybersecurity and e-waste.
- India needs to promote secure, energy-efficient and environmentally sustainable data centres to support long-term digital growth.
Why in the News?
The Press Information Bureau highlighted the rapid expansion of data-centre infrastructure in India, driven by digitalization, cloud computing, Artificial Intelligence (AI), e-governance and digital payments.
News in Brief
- India’s installed data-centre power capacity increased from around 375 MW in 2020 to 1.57 GW in August 2026, with projections of nearly 8 GW by 2030.
- Nearly USD 70 billion of investments are underway, with another USD 90 billion in announced projects.
- Rising data-centre capacity also raises concerns regarding electricity consumption, cooling, water use, cybersecurity and environmental sustainability.
Rapid Expansion of Data-Centre Capacity
- India’s data-centre sector has expanded rapidly with the growth of cloud computing, artificial intelligence, digital payments and e-governance.
- India’s installed data-centre power capacity stood at 1.57 GW in August 2026 up from around 375 MW in 2020.
- The capacity is projected to reach nearly 8 GW by 2030.
- Data Centres require uninterrupted electricity, reliable internet connectivity, advanced cooling systems and strong cybersecurity infrastructure.
- A data centre is a specialised and secure facility that houses computing, storage and networking equipment.
- It enables the storage, processing, management and distribution of large volumes of digital information.
- Data centres support a wide range of services, including:
- Online banking and financial services
- Digital payments
- e-Governance
- Cloud computing
- Artificial Intelligence
- Other data-intensive digital applications
Policy Support
- The government has introduced several measures to encourage investment in data-centre infrastructure.
- Infrastructure status- Data centres were included in the Harmonized Master List of Infrastructure Sub-sectors in Budget 2022-23.
- This facilitates access to infrastructure financing and supports sectoral expansion.
- Union Budget 2026-27- A tax holiday has been provided to eligible foreign cloud service providers until 2047, subject to specified conditions.
- This is aimed at attracting global cloud and digital infrastructure investments to India.
Linkages with Emerging Technologies
- The expansion of data centres is closely connected with India’s wider technology ecosystem.
- Growing demand for computing and data storage is being supported by initiatives such as,
- IndiaAI Mission
- Semicon India Programme 2.0
- Electronics Components Manufacturing Scheme
- PLI Scheme 2.0 for IT Hardware
- Cloud computing and Artificial Intelligence
- Digital Public Infrastructure
Rising Energy Demand
- Data centres operate continuously and therefore require a stable and uninterrupted power supply.
- According to the Central Electricity Authority, electricity demand from data centres could reach around 17 GW by 2031-32.
- This growing demand highlights the need to combine digital infrastructure expansion with cleaner and more reliable sources of energy, including,
- Renewable energy
- Green Energy Open Access
- Green Energy Corridors
- Nuclear Energy
- Other low-carbon energy sources
Water Use and Cooling Technologies
- Cooling systems are essential for preventing servers and other equipment from overheating.
- Conventional cooling can consume considerable amounts of electricity and water.
- Newer technologies are being adopted to improve efficiency, including:
- Direct-to-chip liquid cooling
- Immersion cooling
- Adiabatic cooling
- Closed-loop cooling
- These technologies can help reduce the energy and water intensity of data-centre operations.
Environmental Concerns
- The rapid growth of AI and cloud computing is increasing the demand for data-centre capacity.
- This can create a resource-use challenge:
Higher computing demand → greater electricity consumption → increased cooling requirement → higher water and energy use → environmental pressure
- Therefore, the expansion of digital infrastructure needs to be accompanied by greater emphasis on energy efficiency, water conservation and low-carbon power.
Standards and Regulation
- Resource efficiency is becoming an important aspect of data-centre management.
- The Bureau of Indian Standards (BIS) has developed standards and indicators to assess different aspects of data-centre efficiency, including:
- Power Usage Effectiveness (PUE)- Measures the efficiency of energy use in a data centre.
- Carbon Usage Effectiveness (CUE)- Assesses carbon emissions associated with data-centre operations.
- Water Usage Effectiveness (WUE)- Measures water consumption in relation to IT operations.
- Cooling Efficiency Ratio (CER)- Indicates the efficiency of cooling systems.
- Such measures can help operators identify inefficiencies and improve the environmental performance of data centres.
Strategic Significance for India
- The importance of data centres extends beyond the IT sector.
- They are increasingly becoming part of India’s critical digital infrastructure.
- A strong data-centre ecosystem can support,
- Expansion of the digital economy
- Wider adoption of AI and cloud-based services.
- Greater resilience of Digital Public Infrastructure
- Growth of technology-intensive industries.
- Improved delivery of digital public serices
- India’s ambition to become a major hub for digital and emerging technologies.
- However, the expansion of data centres also creates concerns relating to electricity consumption, water use, cybersecurity, e-waste and environmental sustainability.
- Thus, India’s challenge is not merely to increase data-centre capacity, but to build infrastructure that is secure, resilient, energy-efficient and environmentally sustainable.
Challenges
Despite rapid growth, India’s data-centre expansion faces several challenges,
- Continuous computing operations create substantial and growing power requirements.
- Conventional cooling systems can place additional pressure on local water resources, particularly in water-stressed regions.
- Concentration of large volumes of data and critical digital infrastructure increases the potential impact of cyberattacks.
- Data centres tend to be concentrated in major urban and technology hubs, creating pressure on local power, land and water resources.
- Dependence on imported servers, chips and other critical IT hardware can create supply-chain vulnerabilities.
- Meeting rising electricity demand while reducing the carbon footprint of digital infrastructure remains a major challenge.
- Rapid technological upgrades can increase the generation of obsolete servers, batteries and electronic components, requiring effective recycling and responsible disposal.
- India has to balance the benefits of global cloud infrastructure with requirements relating to data protection, security and strategic control over critical data.
Way Forward and Conclusion
India should promote green data centres through renewable energy, efficient cooling, water conservation and stronger cybersecurity. Domestic manufacturing of critical IT hardware can reduce import dependence.
A balanced approach integrating digital growth, energy security and environmental sustainability will help data centres become a resilient foundation for India’s digital economy.
UPSC Prelims and Mains Practice Question
Consider the following statements regarding data centres in India:
- Data centres support services such as cloud computing, e-governance and digital payments.
- Data centres were accorded infrastructure status in India in 2022.
- Power Usage Effectiveness (PUE) is an indicator used to assess data-centre energy efficiency.
Which of the statements given above is/are correct?
A) 1, 2 and 3
B) 1 and 2 only
C) 2 and 3 only
D) 1and 3 only
Answer: 1, 2 and 3
Mains Practice Question
Q) India’s rapid expansion of data-centre infrastructure is essential for its digital economy but also creates significant energy and environmental challenges. Discuss. (250 words)
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