Centre To Roll Out Data Centre Policy Amid Power Cost Concerns
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The Centre is preparing a policy for data centres, minister of state for IT Jitin Prasada said, amid concerns about the sector’s growing electricity demand and its potential impact on consumers’ power bills.
Prasada made the announcement at the Central Electricity Authority’s brainstorming conclave on ‘Making Indian Power Sector AI Enabled’. He did not disclose the policy’s scope or a timeline for its rollout.
At the conclave, he said the policy is needed “because we believe India is a very fertile ground for hyperscaler data centres”.
According to Reuters, Prasada also said data centres in some countries are diverting power from consumers, leaving them paying higher electricity bills — a situation the government wants to avoid.
His comments follow his remarks last month about balancing data centre expansion with environmental safeguards. Speaking at the inauguration of Microsoft’s data centre infrastructure, Prasada had said India has the land, talent, and other requirements to attract investments, while the government is working to ease the process of setting up operations.
He also said expansion must not come at the cost of environmental sustainability or excessive water consumption, pointing to efforts to increase green power generation and technologies that recirculate water in closed loops.
These concerns have already triggered opposition to some large projects. In Maharashtra’s Thane, residents have protested against Amazon’s proposed data centre, which is expected to consume 422 MW of power, citing concerns about electricity and water demand, noise from backup diesel generators, and tree felling.
Meanwhile, Google began construction of its AI hub in Visakhapatnam in April as part of its planned $15 Bn investment in India between 2026 and 2030. The project has also faced opposition from residents and civil society organisations over land use, water demand, and energy consumption.
Google and Amazon have denied wrongdoing and said their facilities use advanced technologies to minimise resource consumption, according to Reuters.
The push for safeguards comes alongside efforts to attract more data centre investments. The Union Budget 2026-27 proposed a tax holiday until 2047 for eligible foreign companies providing cloud services globally through India-based data centres.
These policy efforts accompany a wider push by global technology companies, including OpenAI, Microsoft, and Meta, to expand their data centre presence in India.
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