• India is witnessing a data centre boom, with major tech companies planning large investments and states competing to attract projects.
• This growth is increasing pressure on electricity, water and land, and may worsen urban heat.
• The lack of a clear national framework to assess these environmental and resource costs highlights the need for common, enforceable standards.

What is a Data Centre?

• A facility housing thousands of computer servers that store, process, and distribute large amounts of digital data — the backbone of cloud computing, AI, streaming, e-commerce and online services. Energy-intensive and water-intensive, requiring constant power and cooling.

The Scale of the Boom

• Capacity has nearly tripled — from 520 MW in 2020 to nearly 1.5 GW today — projected to hit 6.5 GW by 2030.
• Electricity demand is expected to rise from about 13 TWh in 2024 to roughly 57 TWh by 2030.
• AI alone is estimated to add 26.3 GW of new demand by 2031-32.

1. Water Stress Dimension

• A 100 MW data centre consumes about 2 million litres of water daily — equivalent to ~6,500 households.
• India’s data centres consumed an estimated 150 billion litres in 2024-25, projected to more than double to 358 billion litres by 2030.
• Clustering in water-stressed regions: Rajasthan extracts 147% of its annual groundwater recharge; Telangana has 16 districts under groundwater stress; Mumbai’s reservoirs stood at just 44.5% of capacity in March 2026.
• Governance gap: no State policy requires public disclosure of water use or a hydrogeological assessment before approval.

2. Electricity & Grid Dimension

• India’s power grid is already straining — Maharashtra’s peak demand hit a record 27,230 MW in April 2026.
• Transmission is the real bottleneck: India curtailed 300 GWh of renewable energy in Q1 2026 simply because the grid could not carry it.
• The coal risk: if renewable energy cannot reach data centres, power comes from coal — adding to the emissions India is trying to cut.

3. Heat Generation & Urban Heat Island Dimension

• A March 2026 study found data centres raise land surface temperatures by an average of 2°C within a 10 km radius (extreme cases: 9.1°C), affecting an estimated 340 million people globally.

4. Economic Dimension

• Massive investment potential (~$200 billion) and job creation, positioning India as a global digital hub.
• Risk of “socialising” costs — infrastructure costs could be transferred to ordinary consumers through higher electricity tariffs.

5. Governance & Federalism Dimension

• States offer tax benefits, electricity duty exemptions and transmission waivers to attract data centres, but environmental safeguards are often limited.
• Maharashtra reduced its renewable energy requirement to 51%; Telangana classified data centres as essential services for uninterrupted power.
• Gujarat and Tamil Nadu have renewable energy provisions, but monitoring and enforcement remain weak.

• Development vs. Sustainability: Ignoring water, power and climate limits can create higher costs for future generations.
• Race to the Bottom: States competing for investment may offer excessive concessions and weaker green rules, harming long-term resource security.
• Main Challenge — Transmission: India has enough planned generation capacity; transmission and market design are the real constraints.
• Locational Mismatch: Data centres concentrate in Mumbai, Hyderabad, Bengaluru and NCR, where water and grid stress is already high.
• Digital Growth vs. Climate Goals: India must balance Digital India ambitions with Net-Zero 2070 and renewable energy goals.

Data centres are critical infrastructure for India’s digital future and will be built. The real question is whether they will be built in a way that protects India’s water, power grid and climate — converting the digital gold rush into sustainable, climate-resilient growth.