Sohani Singh.
India is rapidly emerging as a major destination for data centre investments as the growing adoption of artificial intelligence (AI), cloud computing, and digital services drives demand for computing infrastructure. Data centre investments are accelerating across the country, with states such as Maharashtra, Andhra Pradesh, Telangana, and Tamil Nadu competing to attract some of the world's largest technology companies. For state governments, these projects promise capital investment and the opportunity to position their states as leaders in India's digital economy. Yet, as India celebrates its growing digital ambitions, an important question remains largely absent from the conversation: can India expand its digital infrastructure without placing additional strain on already scarce water and electricity resources that under strain in many states of the country?
The growing competition for data centres reflects a broader shift in the development and economic priorities of Indian states. As seen before in the competition to attract automobile hubs and manufacturing plants, state governments are now viewing data centres and hubs for digital infrastructure as the latest forces driving economic growth. Data centres attract significant domestic and foreign investment, create employment during construction and operations, strengthen digital connectivity, and encourage technology companies to establish a long-term presence. For state governments, these projects have become a symbol of economic credibility, signalling their readiness to play a leading role in India's AI-driven future.
This is where India's digital ambitions intersect with its long-standing developmental challenges. The rapid expansion of data centres goes beyond just technology policy. Data centres require a continuous supply of electricity and large volumes of water for cooling, depending on the technology used. Simultaneously, several states leading the race for these investments grapple with recurring water shortages, irrigation demands, groundwater depletion, and pressure on electricity networks. Maharashtra, Tamil Nadu, and Karnataka, for example, have all faced periodic concerns over water availability and power supply for farming. Maharashtra, India's largest data centre market, knows this dilemma all too well. While Mumbai and its surrounding cities continue to attract billions in digital infrastructure investment, other parts of the state like Vidarbha and Marathwada regularly face drought conditions, irrigation challenges, and concerns over electricity availability for agriculture. The issue, therefore, is not whether India should build more data centres, but whether the supporting infrastructure can expand quickly enough to meet the needs of digital infrastructure without compromising the needs of traditional sectors such as agriculture.
Attracting data centres is only the first step in India's digital transformation. The greater challenge lies in ensuring that the infrastructure needed to support them grows alongside India's digital ambitions. This will require investment not only in data centres, but also in electricity generation, transmission networks, water management, and increased use of renewable energy. In the bid to secure data centre projects and AI investments, state governments must remember that the same water and electricity powering the digital economy also sustain farms, industries, and households. The future of India's AI revolution will depend not only on attracting investment, but on ensuring that technological progress does not come at the cost of its already strained natural resources and the welfare of its citizens.
PROFILE: SOHANI SINGH
Sohani Singh is a global political analyst, specialising in electoral strategy and public policy. She is an alumnus of King's College London, where she graduated with a degree in International Relations from the Department of War Studies.
She writes prolifically on political communication, electoral dynamics, and the evolving role of digital media in shaping democratic outcomes.
