India's Potential as a Data Centre Hub
India has the potential to become a significant data centre hub in the Asia Pacific region, as highlighted by a Deloitte report. Despite consuming nearly 20% of global data, India hosts less than 5% of the world’s data centres, indicating substantial growth potential.
Structural Advantages
- Lower construction and land costs
- Competitive power tariffs
- Large AI-skilled workforce
Policy Support
- Tax holiday until 2047 for foreign cloud service companies operating in India
- Preferential tax treatment to incentivize data centre investments
Projected Growth in Data Centres
The Asia Pacific is expected to see USD 800 billion in data centre investments by 2030, becoming the largest market outside North America. India is projected to significantly contribute to this growth, with its data centre capacity expected to expand from 1.5 GW in 2025 to 8-10 GW by 2030.
Challenges in Power Supply
- AI-driven expansion will increase electricity demand significantly
- AI data centres require dedicated, uninterrupted power supply
- Variations in renewable banking rules and tariffs across states create uncertainty
State-Level Impact
Major data centre hubs like Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka, Telangana, and Andhra Pradesh could each see an additional 2-3 GW peak demand by 2030, impacting state grids significantly.
Key Recommendations
- Accelerate renewable integration with solar-wind hybrid models and storage solutions
- Expand long-term green power purchase agreements and captive renewable installations
- Upgrade transmission networks and create dedicated Data Centre Economic Zones
- Standardize state-level renewable banking policies
- Leverage AI for scheduling tasks during low-cost, high renewable availability periods
Conclusion
If effectively implemented, these measures could position India as a global leader in sustainable AI infrastructure, enhancing long-term energy security and supporting its digital economy goals.
