️ India recently announced a two-decade tax break for foreign tech companies using data centers in the country to serve overseas customers, though services for Indian clients remain taxed.
️ This move is part of India's efforts to attract investors to its fast-growing digital infrastructure... sector and become a global hub for artificial intelligence (AI) and cloud computing infrastructure.
️ Prime Minister Narendra Modi's administration has already rolled out incentives such as granting infrastructure status to data centers to accelerate development, with some state governments easing land-use rules.
️ New Delhi hosted a global AI summit last month, gathering figures like OpenAI's Sam Altman, Google's Sundar Pichai, and Anthropic's Dario Amodei, showing India's desire to have its voice heard on AI's impact on developing countries and the terms of its deployment.
️ According to consulting firm Deloitte, the Asia-Pacific region is projected to attract about $800 billion in data center investments by 2030, and India aims to capture a significant share of these capital flows.
️ Indian conglomerates like Reliance Industries Ltd., Adani Enterprises, and the Tata Group have made ambitious multibillion-dollar pledges to build AI-related infrastructure, some in partnership with US tech giants, promising to position India as a global leader in AI and cloud computing and create thousands of new jobs.
️ However, Apar Gupta, founding director of the Internet Freedom Foundation, stated that data centers are not equivalent to AI leadership, adding servers and storage rather than the ability to build and control advanced AI.
️ Gupta expressed concern that India is overly focused on infrastructure building while neglecting other key areas, warning that without investment in research, people, and Indian datasets, the country risks mainly hosting infrastructure for global firms without shaping the technology or setting rules.
️ Divij Joshi, research fellow at the London-based Overseas Development Institute, echoed this view, saying hosting servers does not mean controlling what runs on them, and for India to gain real leverage, it would need infrastructure at a scale that makes global AI supply chains dependent on it, which is a long shot given the lead of the US and China.
️ Joshi added that to compete in the global AI race, India needs efficient grids, regulations, tech transfer, and R&D investment first.
️ Some observers also point to the environmental costs of extremely power-hungry AI data centers, which house tens of thousands of servers and advanced chips operating at high temperatures, with GPUs for AI reaching over 90°C.
️ Thus, data centers require vast quantities of stable electricity and water for cooling, and research fellow Joshi noted these demands pose a huge challenge for India's already water-stressed cities.
️ Joshi said these facilities need enormous amounts of water, constant electricity, and stable raw materials, with India having real problems in all three areas, and companies may be attracted more by India's few environmental regulations and willingness to hand over land quickly than by tax breaks.
️ Jyoti Panday, Asia regional director of the Internet Governance Project, underscored growing local opposition to data centers worldwide, noting AI data centers face resistance over power use, and India's advantages like cheaper electricity, centralized decision-making, and limited local resistance make it attractive, but infrastructure constraints in cities like Mumbai and Chennai are real and could intensify.
