India Accelerates Massive AI Data Centre Expansion as Environmental Concerns Take a Back Seat

India is rapidly positioning itself as a global hub for artificial intelligence infrastructure, with billions of dollars in new investments flowing into data centres and cloud computing facilities. However, environmental experts and community advocates warn that concerns related to water availability, electricity consumption, and land use are receiving far less attention than the economic opportunities tied to the country’s AI expansion strategy.

The scale of India’s ambitions was on full display at the recent AI Impact Summit in New Delhi, which brought together leading technology executives including Sam Altman and Sundar Pichai along with policymakers and investors from around the world. The event marked the first time a developing country hosted the global gathering, and Indian leaders promoted it as a platform to attract large scale investment and strengthen the country’s position in the international AI ecosystem. Prime Minister Narendra Modi told attendees that India views artificial intelligence as a major opportunity for economic transformation and technological leadership.

Despite the enthusiasm surrounding AI development, environmental groups say the rapid expansion of data centres could place additional strain on already limited water and energy resources in several regions. Facilities that support artificial intelligence require significant cooling capacity and continuous power supply, making them among the most resource intensive components of digital infrastructure. In Hyderabad, for example, projections suggest the city could face a daily water shortage of nearly 909 million litres within the next two years, even as major cloud providers continue expanding their presence there. Similar concerns have emerged in Pune, where water scarcity triggered protests last year while new AI infrastructure projects were being planned.

India is increasingly attracting global technology investment as it seeks to become a major AI growth market. The country currently generates nearly 20 percent of the world’s data but hosts only about three percent of global storage capacity. Ahead of the summit, major firms including Google, Amazon, and Microsoft collectively committed approximately 68 billion US dollars toward AI related projects across India. Google alone is investing about 15 billion US dollars to build a large scale AI hub and data campus in Visakhapatnam in partnership with major Indian conglomerates. The facility is expected to become the company’s largest artificial intelligence hub outside the United States.

Even with this rapid expansion, analysts note that India still lacks a comprehensive national framework governing the environmental impact of data centre development. Research from the Council on Energy, Environment and Water suggests that energy and water consumption linked to data centres in India could more than double by 2030. A study prepared for NITI Aayog estimates freshwater demand from AI data infrastructure alone could reach as high as 1.7 trillion gallons as early as next year. Separate projections from S&P Global indicate more than 60 percent of India’s existing data centres may face high water stress conditions during this decade.

Local communities near proposed infrastructure sites are also raising concerns about land acquisition and potential impacts on agriculture and water access. Researchers working with the Digital Empowerment Foundation say residents in parts of Telangana have questioned how land is being allocated for projects and whether promised employment opportunities will materialize. In 2023, a group of farmers and villagers filed a case before the Telangana High Court alleging improper land use connected to data centre expansion projects.

International policymakers attending the summit acknowledged similar debates are emerging elsewhere. Canada’s Minister of Artificial Intelligence Evan Solomon said Canadians are also increasingly asking whether large scale AI infrastructure will affect electricity costs and water supplies. While governments around the world compete to attract investment in artificial intelligence capacity, observers say balancing economic growth with environmental accountability is likely to become a central policy challenge as the global data centre race accelerates.