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.