Hello, I'm Priyanka Salve, bringing you this edition of Inside India from Singapore.
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India is considered one of the world’s most sought-after data center markets, with several major U.S. tech companies investing in building capacity there. However, recent projects have faced public backlash due to concerns over water and electricity usage.
The Indian government is now taking measures to address this situation. Will these actions be effective?
If you have any thoughts about today's briefing, feel free to share them with the team.
Key Story
Several major U.S. tech companies are investing billions of dollars in digital infrastructure in India, but they are facing growing public discontent centered on resource allocation and environmental concerns, prompting government intervention to cool tensions.
On October 14, Junior Minister of Electronics and Information Technology Jitin Prasada announced that India will introduce a data center policy, calling the country a "fertile ground" for hyperscale cloud providers.
According to reports, the minister stated that India does not want consumers to face higher electricity bills due to data centers competing for power supply.
Globally, data center companies are facing public backlash, with communities expressing concerns about their electricity, water, and land use. India is also grappling with similar issues that could threaten its ambition to attract global data business.
According to local media reports, the Amazon data center near Mumbai is facing resistance from residents who fear that the U.S. company’s facility will be given priority for water and electricity during shortages.
Meanwhile, environmental activists have been calling for the revocation of the permit for the Visakhapatnam AI data center, where Google is building its $15 billion project.
Amazon told CNBC that the company is committed to being a “good neighbor and responsible neighbor” and is engaging with the community through educational initiatives. Amazon denied using water for cooling and added that its data centers “do not draw power from the local distribution network that supplies homes, stores, and businesses.”
The U.S. company also stated that it will participate in government-led industry consultations to provide recommendations on India’s data center regulatory rules.
Google did not respond to CNBC's request for comment.
Experts told CNBC that the government plans to issue policy guidelines to ease local opposition facing some projects nationwide.
They added that the policy will also establish clear approval guidelines to reduce risks for data center developers arising from public opposition and enforcement challenges.
Policy shift
Grant Thornton Bharat partner Jaspreet Singh told CNBC that the proposed policy signals a shift in direction: from primarily encouraging data center investments to also considering infrastructure readiness and sustainability factors.
Last week, India’s government think tank, Niti Aayog, released a framework to help local governments assess the sustainability of data center projects based on grid readiness and water availability, and to recommend suitable locations.
The framework emphasizes that guidelines must be established "before restrictions arise," and adds that data centers should only receive expedited approval when resources are ready, local safeguards are in place, and public value has been demonstrated.
Experts involved in the consultation expect that the new policy will establish clear and consistent rules, helping the industry overcome challenges related to land acquisition and streamline the fragmented approval process.
Shobhit Agarwal, CEO of real estate advisory firm ANAROCK Capital, told CNBC: "India lacks a dedicated national policy for data centers, and this gap has long needed to be addressed."
He explained that the project is currently approved under existing environmental and building regulations, and each state has its own "differences and incentives."
Although the Indian government has warmly welcomed hyperscale cloud providers to invest in data centers in India, even offering them 20-year tax incentives, regional governments hold the final authority over the provision of land, water, and electricity.
Nikhil Narendran, a technology practice partner at Trilegal, which collaborates with major U.S. tech companies, said that data center projects proposed by local governments are often located in areas already under strain for electricity, water, and other infrastructure.
He added that state governments should be encouraged to identify locations with reliable electricity, adequate cooling infrastructure, availability of water, and high-quality connectivity—rather than simply competing to announce large investments.
Still need to know
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- India's Finance Minister said market liquidity makes it easier for investors to exit. India's Finance Minister Nirmala Sitharaman stated that higher liquidity in India's stock market makes it easier for foreign portfolio investors to exit.
- Investors such as BlackRock and GIC are competing to participate in the IPO of Indian telecom giant Jio, with anchor book subscriptions exceeding $26 billion. According to people familiar with the matter, the anchor allocation for Jio Platforms’ initial public offering has been oversubscribed by more than 30 times, attracting bids from top asset management firms including BlackRock, Capital Group, and GIC.
- Despite intervention by India’s central bank, the rupee is still expected to weaken toward 100 per U.S. dollar. Strategists say that the Reserve Bank of India’s efforts to slow the currency’s depreciation will provide only temporary relief, and the rupee is forecast to continue weakening by year-end and mid-2027, with the 100 rupees per U.S. dollar level not ruled out.
Next
- October 23: HSBC October Composite Flash PMI
- October 28: India's September Industrial Output