India Plans Data Centre Policy as AI Growth Raises Electricity and Water Concerns

India is preparing to introduce a national data centre policy as concerns grow over the electricity and water requirements of rapidly expanding digital infrastructure. Junior IT Minister Jitin Prasada announced the move on 14 October 2026, saying the government wants to ensure that rising power demand from data centres does not increase electricity costs for consumers. The announcement comes as global technology companies expand their AI and cloud infrastructure investments across India.

Speaking at an event organised by the Central Electricity Authority in New Delhi, Prasada described India as a promising market for hyperscale facilities. “India is a very fertile ground for hyperscale data centres,” he said. However, he warned that data centres in some countries were placing pressure on electricity supplies and increasing costs for other consumers, adding, “we don't want to get into that.” The government has not yet specified what the proposed policy will cover or when it will be introduced.

 

Read more: South Korea Unveils $747 Billion Energy Transition and Decarbonization Plan

 

The announcement follows opposition to major data centre developments in Mumbai and Visakhapatnam. Residents near an Amazon facility outside Mumbai have raised concerns about electricity and water consumption, along with noise from construction and operations. Environmental groups have also questioned Google's planned $15 billion data centre project in Visakhapatnam, citing potential impacts on wildlife and land use. Both companies have rejected allegations of wrongdoing and maintain that their facilities use advanced technologies to minimise resource consumption.

India currently regulates data centres through existing environmental and building requirements, while individual states offer investment incentives. The central government views the sector as a potential $200 billion economic opportunity, supported by growing demand for AI computing and digital services. A dedicated national policy could provide a more coordinated approach to development, although its environmental and energy provisions remain unannounced.

 

Explore OneStop ESG Marketplace: Grid, utilities & demand management

 

The proposed policy comes as India seeks to attract large-scale technology investment while managing pressure on electricity networks and water resources. Its eventual provisions will determine how the government balances rapid data centre expansion with energy affordability, infrastructure reliability and environmental protection.