AI Impact Summit and Investment Promises
The AI Impact Summit in New Delhi highlighted significant investment commitments to artificial intelligence (AI) and data infrastructure.
- Reliance Industries: Pledged $110 billion towards AI and data infrastructure.
- Adani Enterprises: Committed $100 billion to green energy-powered data centres over the next decade.
- Microsoft: Initially promised $17.5 billion last year and now plans a $50 billion investment in developing-world AI infrastructure.
Rationale for Investment
These investments respond to structural factors like India's high data consumption, which is increasing annually in double digits. Building local data centres aligns with global movements towards data protection and sovereignty. The Indian government's proposal of a 20-year tax holiday for firms using Cloud capacity in India further incentivizes investment.
Challenges and Considerations
- Power and Water Resources:
- Data centres' operational costs heavily depend on power supply, accounting for 20-40% of expenses.
- The expansion of data-centre capacity to 9 Gw by 2030 will consume 3% of India's power, highlighting the need for competitive power tariffs and efficient captive power setups.
- Water consumption remains a critical challenge due to existing disputes among industrial, urban, and agricultural users.
- Profitability and Risks:
- Large-scale investments are contingent on their perceived profitability.
- Global companies have increased investments, prompting questions about their return on investment timelines.
- It is crucial for financial sectors and the government to remain cautious of potential risks.
- Economic Independence:
- Ensuring investment does not lead to dependence on specific geographies for resources or market.
This investment presents an opportunity for India's economy, ensuring sustainable development is essential.
