India’s Data Centre Expansion: Building Secure and Sustainable Digital Infrastructure

Context

India’s rapid adoption of AI, cloud computing, digital payments and e-Governance is creating a strong need for data-centre capacity. These facilities are becoming an important part of the country’s digital and economic infrastructure.

Data centres are specialised facilities that house servers, storage systems, networking equipment, power backup, cooling systems and cybersecurity infrastructure. They enable the storage, processing and distribution of digital information and provide the physical foundation for services ranging from cloud computing and AI to banking and government platforms.

Importance of Data Centres for India

• Digital economy: Data centres support digital payments, banking, e-commerce, cloud services and online public services.
• AI and emerging technologies: AI applications require substantial computing power, data storage and processing. The IndiaAI Mission and semiconductor initiatives are likely to accelerate this requirement.
• Data sovereignty: Greater domestic capacity can support data localisation, cybersecurity and digital sovereignty while reducing dependence on infrastructure located outside India.
• Investment and employment: Expansion can attract domestic and international investment and create opportunities across cloud computing, electronics, semiconductors and other technology-intensive sectors.

Government Measures Supporting the Sector

India has introduced several measures to develop the broader digital infrastructure ecosystem:

• Infrastructure status: Data centres were included in the Harmonized List of Infrastructure under Budget 2022–23, improving their access to long-term financing.
• Tax incentives: Budget 2026–27 introduced a tax holiday for eligible foreign cloud-service providers using India-based data-centre infrastructure.
• IndiaAI Mission: Seeks to expand India’s AI capabilities and computing infrastructure.
• Semicon 2.0: Aims to strengthen and diversify India’s semiconductor ecosystem.
• Electronics Components Manufacturing Scheme: Increased allocation is intended to strengthen domestic electronics manufacturing.
• PLI 2.0 for IT Hardware: Encourages domestic production of servers and other IT hardware.
• Government data infrastructure: NIC operates National Data Centres in Delhi, Pune, Hyderabad and Bhubaneswar, supported by smaller centres at State Capitals, to provide digital government services.

Challenges in Expanding Data-Centre Capacity

The expansion of digital infrastructure also creates significant resource and security pressures.

• Energy intensity: Data centres require uninterrupted electricity for servers, cooling and backup systems. Their electricity demand could reach around 17 GW by 2031–32.
• Water stress: Conventional cooling technologies can consume substantial quantities of water, creating concerns when facilities are located in water-stressed regions.
• Environmental costs: Fossil-fuel-based electricity increases carbon emissions, while rapid replacement of electronic equipment can add to e-waste.
• Cybersecurity threats: Data centres concentrate critical information and infrastructure, making them potential targets for cyberattacks, outages and other disruptions.
• Infrastructure requirements: Reliable electricity, high-speed fibre connectivity, suitable land, cooling systems and skilled professionals are necessary for sustained expansion.
• Geographical concentration: Heavy concentration around large metropolitan areas can intensify pressure on land, electricity, water and other urban resources.

Making Data Centres More Sustainable and Efficient

The next phase of expansion needs to focus not only on capacity but also on resource efficiency.

• Increase the use of renewable energy, green-energy open access and energy-efficient infrastructure.
• Promote liquid, immersion, adiabatic and closed-loop cooling technologies to reduce water and energy requirements.
• Encourage waste-heat recovery, water recycling and circular-economy practices.
• Use performance indicators such as:
  • PUE: Power Usage Effectiveness
  • WUE: Water Usage Effectiveness
  • CUE: Carbon Usage Effectiveness
  • CER: Cooling Efficiency Ratio
• Strategically locate facilities according to availability of reliable power, renewable-energy potential, connectivity and sustainable water resources.

Way Forward

India should pursue a distributed and sustainable data-centre ecosystem rather than concentrating capacity in a few metropolitan regions. Renewable power, efficient cooling, water recycling and resilient electricity systems should be integrated into new facilities from the planning stage.

At the same time, stronger encryption, redundancy, disaster-recovery mechanisms and critical-infrastructure protection are necessary to improve cyber resilience. Developing domestic capabilities in servers, semiconductors, networking equipment and cooling technologies can also reduce external dependencies.

Policy coordination between Digital India, IndiaAI, semiconductor manufacturing, energy, water and environmental policies will be important for achieving this balance.

Conclusion

Data centres are evolving from basic storage facilities into strategic infrastructure for India’s digital economy, AI ecosystem and governance. Their expansion must therefore combine technological capacity with energy efficiency, water sustainability, cybersecurity and domestic technological capability to support India’s long-term digital ambitions.

Source : DD News