India plans data centre policy; Govt wants growth without a hike in electricity tariffs

India is considering introducing a policy to regulate data centres to manage growing electricity demand for ordinary consumers. Data centres use a lot of electricity to run online services, including AI tools, cloud computing and streaming platforms. The proposed policy aims to ensure that the sector’s expanding energy needs do not lead to higher electricity bills for households and other consumers, according to a Reuters report.

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India’s data centre policy: What to expect

India has been at the forefront of data centre buildout, with companies like Google, Microsoft, and Amazon investing in the country to strengthen their cloud computing and AI infrastructure amid growing demand for digital services. Despite the investment, India currently does not have a separate, dedicated policy specifically for data centres.

Data centres are currently approved under existing environmental regulations and building rules rather than under a separate policy designed specifically for the sector. Some Indian states also offer their own incentives to attract data centre investments, such as benefits for companies setting up facilities in their regions.

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Now, the country is planning to develop data centre policies following the protests in cities such as Mumbai and Visakhapatnam ​by residents against data centres. Residents living near Amazon's data centre site outside Mumbai are claiming that the facility is putting pressure on electricity and water supplies and creating noise pollution.

There are also concerns over Google's Visakhapatnam project, with environmentalists saying that the $15 billion data centre project could harm local wildlife. However, Google and Amazon have rejected the allegations, saying the concerns are unfounded.

Reuters quoted Junior IT Minister Jitin Prasada, who announced the proposed policy, but did not explain what it would cover or when it would be launched. However, he emphasised Prime Minister Narendra Modi vision to become a global hub for data storage.

The government sees the data centre sector as a potential $200 billion opportunity. Prasada also described India as an ideal location for hyperscale data centres. However, he also highlighted that India wants to avoid the growing electricity bill situation for consumers.