Earlier this year, Andhra Pradesh laid the foundation for Google’s $15 billion AI hub in Visakhapatnam, a hyperscale data centre project with AdaniConneX and Airtel Nxtra as partners. Adani has also announced plans to invest $100 billion in renewable-powered, AI-ready data centres by 2035. Tata’s data centre business has signed up OpenAI as a customer, starting with 100 MW of capacity. Others are circling the same opportunity. India’s data centre capacity, already growing fast, is expected to cross 3 GW by 2028. Instead of San Francisco or Seattle, the AI cloud will now be built in India, by Indian engineers. For a country that has spent years saying that it must not miss the AI bus, this is good news. Indian companies need local compute and affordable access to models, the govt and armed forces need sovereign AI infrastructure, and our GCCs are becoming serious AI deployment engines for the world. If AI is the new electricity, India cannot remain dependent on someone else’s turbines and grid.

However, most often we think of ‘the cloud’ as a fluffy white thing floating harmlessly above us. But this cloud needs land, water, power, cooling systems, diesel backups, permissions, tax breaks, and, often, silence from the people who live nearby.

The biggest shadow it casts is on water. Nearly 600 million Indians face high to extreme water shortage, and water demand is expected to be twice the supply by 2030. When local communities feel that companies are sipping from the same aquifer as farmers and households, it results in societal backlash. Tensions are already visible in the US. Closer home, the Plachimada Coca-Cola dispute in Kerala became a symbol of a deeper fear that corporate thirst can empty village wells faster than nature can refill them.

And compared to AI data centres, soft-drink bottling looks like just the appetiser. A medium-sized data centre can consume roughly 110 million gallons of water a year to cool its AI servers and GPUs, enough for around a thousand households. Large facilities can use up to 5 million gallons a day, comparable to a small town’s needs. Multiple estimates suggest that India’s current data centres consume 150 billion litres of water annually, and this is before the AI expansion really takes off! There is also electricity, the data-centre demand for which could reach an eye-watering 13.56 GW by 2031/32. If it is planned well, powered by renewables and connected to new grid capacity, it can strengthen India’s energy transition. Planned badly, the ‘AI factory’ will become the new VIP consumer, with assured power, while the ordinary citizen gets load-shedding and higher tariffs.

Then comes land. Land acquisition in India has rarely been a happy story. Data centres take acres, and do not create employment in proportion to the land and power they consume. Even noise is an issue with their constant unsettling hum. In parts of the US, residents living near data centres complain about sleep disruptions. So, what should we do? Stopping the building of data centres is not the solution. AI infrastructure will be as important to the 21st century as dams, railways, ports and power plants — evocatively referred to as the ‘temples of Modern India’ — were to the 20th. The question is whether these become the Bhakra-Nangal dams of the AI age, or the East India Company factories of the compute age — impressive structures that extract local resources for distant masters.

• First, take a cue from China. Its ‘East Data, West Computing’ strategy moves data centres to western regions with cheaper land, abundant renewable energy and natural cooling, while serving demand-heavy eastern cities through networks. In other words, build compute where resources are plentiful, and pipe intelligence to where demand lives. India too can put large AI data centres where water, clean power, climate, land and grid capacity make sense, not where politics, subsidies or proximity to a port make a deal attractive
• Second, make every AI data centre disclose its expected water usage, source and cooling technology, before approvals are granted.
• Third, price resources honestly. If a data centre needs premium power, land and water, it should pay for it. Part of the project economics should fund municipal water systems, grid upgrades, local schools, skilling centres and health facilities, so that local communities see tangible benefit, not just national pride.
• Finally, India should build green data-centre standards and regulations before a US-style backlash begins. Using recycled or non-potable water, dry cooling in water-stressed regions, renewable power purchase agreements, buffer zones for noise and independent audits.

This cloud can have a silver lining: India needs to build data centres but to avoid a US-style backlash, the focus should be on safeguards and sustainability

India too can put large AI data centres where water, clean power, climate, land and grid capacity make sense, not where politics, subsidies or proximity to a port make a deal attractive.

Second, make every AI data centre disclose its expected water usage, source and cooling technology, before approvals are granted.

Third, price resources honestly. If a data centre needs premium power, land and water, it should pay for it. Part of the project economics should fund municipal water systems, grid upgrades, local schools, skilling centres and health facilities, so that local communities see tangible benefit, not just national pride.

Finally, India should build green data-centre standards and regulations before a US-style backlash begins. Using recycled or non-potable water, dry cooling in water-stressed regions, renewable power purchase agreements, buffer zones for noise and independent audits.

India should build the AI factories it needs. But it must build them with the wisdom of a civilisation that has always known the sacredness of water, land and energy. The cloud is welcome, but it should not cast a dark shadow on Indian soil. Else the backlash will force it to come down to earth.

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