Hello, this is Priyanka Salve, writing to you from Singapore.
Welcome to the latest edition of "Inside India" — your one-stop destination for stories and developments from the world's fastest-growing large economy.
India is touted as one of the hottest markets for data centers, with several U.S. Big Tech companies investing to set up capacity in the country. But of late, some projects have faced public backlash over the use of water and power resources.
Now the Indian government is taking steps to address the situation. Will it work?
Any thoughts on today's newsletter? Share them with the team.
This photograph taken on September 6, 2026 shows men sitting behind a display opposing a Google AI and data center hub project during the People's Convention on AI Data Centers event at Visakhapatnam in India's Andhra Pradesh state.
Idrees Mohammed | Afp | Getty Images
Several U.S. Big Tech companies that are spending billions to set up digital infrastructure in India are facing growing public anger over resource sharing and environmental concerns, prompting the government to step in and calm tensions.
On Oct. 14, Jitin Prasada, a junior minister for electronics and information technology, announced that India will roll out a policy for data centers, calling the country a "fertile ground for hyperscalers."
The minister reportedly said India wants to avoid a situation where consumers have to pay more for power because they have to compete with data centers for supply.
Globally, data center companies are facing public backlash as communities raise concerns over electricity, water and land use. India is also grappling with similar issues that pose a threat to its ambitions to host the whole world's data.
As per local media reports, Amazon's data center near Mumbai is facing resistance from residents who are worried that the U.S. company's facility would receive priority access to water and electricity during shortages.
Meanwhile, environmental activists have been demanding the cancellation of permissions given to AI data centers in Visakhapatnam, where Google is constructing its $15 billion project.
Amazon told CNBC that it is committed to being a "good and responsible neighbor," and said it is engaging with the community through educational sessions. They denied using water for cooling and added that their data centers "do not draw electricity from the local distribution network that supplies homes, shops and businesses."
The American firm also said it "will be a part of industry consultations with the government to advise on India's data center regulations."
Google did not respond to CNBC's request for comments.
Experts told CNBC that the government plans to roll out a policy directive to pacify local resistance to some projects across the country.
It will also lay down clear approval guidelines that will minimize the risks data center developers face from public pushback and execution challenges, they added.
Policy shift
The proposed policy indicates a shift in direction from "primarily encouraging the data center investment" to now balancing it with infrastructure readiness and sustainability aspects, Jaspreet Singh, partner at Grant Thornton Bharat, told CNBC.
Last week, Niti Aayog, an Indian government think tank, shared a framework for local governments to evaluate data center projects for sustainability and to provide suitable locations, based on grid readiness and water supply availability.
It underscored the need to establish guidelines "before constraints emerge," adding that data centers should get faster approvals only in cases where resource readiness, local safeguards and public value are proven.
Experts who are part of consultations expect the new policy to lay down clear and consistent rules, which will also help the industry overcome challenges around land acquisition and simplify a fragmented approval process.
"India does not have a dedicated national policy for data centers, and it is high time that this gap was addressed," Shobhit Agarwal, chief executive of real estate consultancy ANAROCK Capital, told CNBC.
He explained that projects are currently approved under existing environmental and building rules, and every state has its own "variations and incentives."
While the Indian government has been enthusiastic in welcoming the hyperscalers to invest in data centers in India, even giving them 20-year tax sops, regional governments are the final decision-makers when it comes to providing land, water and power resources.
Nikhil Narendran, a partner for technology at law firm Trilegal, who works with U.S. Big Tech companies, said local governments are proposing data center projects in locations that are already facing constraints in terms of electricity, water and other infrastructure.
He added that state governments need to be encouraged to identify locations where reliable electricity, substantial cooling infrastructure, water availability and high-quality connectivity are available, "rather than simply competing to announce large investments."
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