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Amid mounting citizen backlash and resource manragement constraints, there is a need to shift the focus of data centre governance beyond record-breaking investments and scale to public interest and accountability.

Introduction

India’s data centre boom needs to be cognizant of the opportunity cost. The Data Centre Policy 2020 focused on creating a regulatory environment for ease of doing business and on providing possible incentives. States followed suit, developing strategies to encourage investment, as seen in the cases of Uttar Pradesh, Odisha, Andhra Pradesh and Karnataka. The underlying focus in the Plans so far has been data localisation rather than artificial intelligence. AI-ready data centres require significant investments not only in GPU-based computing infrastructure but also in electricity generation, grid connectivity, and efficient cooling technologies. Policies need to adapt to increasing infrastructural demands while also reflecting broader questions emerging around public accountability and benefit.

How things stand and building a better roadmap

India’s current approach mirrors countries around the world offering quick permits, tax holidays and ease of access to natural resources. Although there is initial success, with

big tech undertaking hyperscaler projects, the costs on the public—particularly those living in proximity to the data centres—and the natural resources create anxieties rather than excitement about the projects.

As of 2026, India has the 6th highest number of data centres in the world. At the same time, challenges are emerging around resource management and citizen concern. At the national level, the Central Electricity Authority—India’s apex power sector planning body—is remapping electricity demand because the data centre boom is concentrated in a few states, adversely affecting national grid stability. At the state level, there is a lack of understanding of resource requirements for running a data centre, with reports from Bangalore’s water board (BWSSB) stating that officials have not tracked the water supplied to data centres as a separate category. Citizen anxieties regarding the planning and the functioning of the data centres have also been raised in Visakhapatnam and Maharashtra.

Governance mechanisms would be pivotal in ensuring public interest and resource management. Crucial to creating strong governance would be enabling consistency between centre and state governments; at the national level, setting standards and coordinating power, water and materials and at the state level enforcing resource budgets, financing grid upgrades, and expanding wastewater and recycling systems. Embedding local government in the fold to better understand the challenges and public perception can help create cohesive governance mechanisms. There is also a need to shift beyond scale to a more citizen-first approach through transparency and accountability. Public data on resource consumption, environmental costs and how communities will benefit from the infrastructure can create a more sustainable governance track.

Learnings from global conversations

Governments around the world, at central and provincial levels, are re-evaluating their data centre strategies. The most recent case of New York—the first U.S. state to halt construction of large new data centres—was in response to rising power costs, straining water supplies and burdening local communities (emphasis mine). In America, the growing local opposition groups have blocked or delayed 75 separate data-centre projects worth an estimated $130 billion. Similarly, in February, Malaysia stated that applications for data centres unrelated to high-technology and AI in Johor had already been stopped.

Johor accounts for around 80 per cent of Malaysia’s operational data centre capacity, driven largely by hyperscale operators, as well as capitalising on absorbing investment that Singapore’s capacity constraints. Prime Minister Anwar Ibrahim, during his announcement, stated that centre investment must deliver tangible returns to the

rakyat(people), not serve investor profit. Both speak to the same sentiment: realising the infrastructure cost is not generating adequate value return for the citizens and communities which are living in proximity to the data centres.

The data centre race is not about who can build the most, but rather who can better manage resources and ensure communities benefit. Creating systems of accountability and transparency through public data for resource management can help address citizen concerns. Conversations also need to prioritise that communities benefit from the data centre boom, through public compute, upskilling and investment in public infrastructure and community systems.

America returns to the drawing board after building 4,000 data centres with rising citizen backlash. Data centre builders and operators are looking at emerging economies, which may have less stringent regulation. India has an opportunity, not only to boost market capture but also to establish a blueprint of development which is public first.

Conclusion

Creating transparency through public data creates a bedrock for building and scaling infrastructure sustainably. They allow us to shift the question from what the real cost of a data centre is to how we conceptualise benefit sharing and value return. India has the potential to create mechanisms which help create better oversight and benefit-sharing, as it is in the early stages of building out data centres. Recognising the challenges, particularly around resource allocation and exacerbating climate change, strategies need to be proactive, not reactionary.