Hello, I am Priyanka Salve, sending you this issue of Inside India from Singapore.

Welcome to read the latest issue of “Inside India” – here we bring you the latest stories and developments from the world’s fastest-growing major economies.

India is regarded as one of the hottest data center markets in the world, with several large American technology companies investing in building capacity there. However, some recent projects have encountered public backlash due to issues with water and electricity usage.

Now, the Indian government is taking measures to address this situation. Will these efforts be effective?

If you have any thoughts regarding today's briefing, feel free to share them with the team.

Key Stories

Several major American technology companies are investing billions of dollars in India to build digital infrastructure, but they are facing growing public dissatisfaction, with concerns focusing on resource allocation and environmental issues. This has prompted the government to step in to ease the tension.

On October 14th, Jitin Prasada, the Junior Minister of Electronics and Information Technology of India, announced that India would introduce a data center policy, stating that India is a "fertile ground" for hyperscale cloud service providers.

It is reported that the minister stated that India does not wish to see a situation where consumers have to pay higher electricity bills due to the competition for power supply among data centers.

Globally, data center companies are facing public backlash, with communities expressing concerns about their use of electricity, water, and land. India is also dealing with similar issues, which could threaten its ambition to undertake global data business operations.

According to local media reports, an Amazon data center near Mumbai is facing resistance from residents, who are concerned that the facilities of this American company will be given priority in accessing water and electricity during times of shortage.

Meanwhile, environmental activists have been demanding the cancellation of the permit for the AI data center in Visakhapatnam, where Google is building its $15 billion project.

Amazon states regarding CNBC, that the company is committed to being a “good neighbor and a responsible neighbor,” and claims that it is interacting with the community through educational activities. Amazon denies the use of water for cooling, and adds that its data centers “do not draw power from the local distribution networks that supply electricity to homes, shops, and businesses.”

This American company also stated that it will participate in industry consultations organized by the government to provide recommendations for data center regulatory rules in India.

Google has not responded to the request for a comment on CNBC.

Experts told CNBC that the government plans to introduce a policy guideline to ease local resistance faced by some projects across the country.

They added that this policy will also establish clear approval guidelines to reduce the risks faced by data center developers due to public opposition and implementation challenges.

Policy Shift

Grant Thornton Bharat Partner Jaspreet Singh told CNBC that the proposed policy indicates a shift in direction: from mainly encouraging data center investments to also taking into account infrastructure readiness and sustainability factors.

Last week, the Indian government think tank Niti Aayog released a framework for local governments to assess the sustainability of data center projects based on the preparedness of the power grid and the availability of water supply, and to provide suitable site selections.

The framework emphasizes the need to establish relevant guidelines "before issues arise," and adds that data centers should only be approved more quickly when resource preparations, local safeguard measures, and public value have been proven.

Experts involved in the consultation expect that the new policy will establish clear and consistent rules, which will also help the industry overcome challenges related to land expropriation and simplify the fragmented approval processes.

The CEO of the real estate consulting firm ANAROCK Capital, Shobhit Agarwal, told CNBC: "India does not have a specific national policy for data centers, and this gap should have been filled a long time ago."

He explained that the project was currently approved based on the existing environmental and architectural regulations, and that each state has its own "differences and incentive measures."

Although the Indian government has always warmly welcomed large-scale cloud service providers to invest in data centers in India, even offering them 20 years of tax incentives, it is the local governments that ultimately make the decisions regarding the provision of land, water, and electricity resources.

Trilegal, a law firm that collaborates with large American technology companies, and Nikhil Narendran, a partner in its technology business, stated that data center projects proposed by local governments are often located in areas that are already under pressure regarding electricity, water, and other infrastructure.

He added that state governments need to be encouraged to identify locations that have reliable electricity, sufficient cooling infrastructure, accessible water resources, and high-quality connectivity, "rather than simply competing to announce large-scale investments."

Also need to understand

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• Indian Finance Minister says market liquidity makes it easier for investors to exit. Indian Finance Minister Nirmala Sitharaman stated that the high liquidity of India's stock market makes it easier for foreign portfolio investors to exit.
• Investors such as BlackRock and GIC have vied to participate in the IPO of India's telecom giant Jio, with a committed subscription of over $26 billion. According to informed sources, the initial public offering (IPO) of India's Jio Platforms has seen its committed investor allocation oversubscribed by more than 30 times, attracting bids from top asset management firms including BlackRock, Capital Group, and GIC.
• Despite the intervention of the Reserve Bank of India, the rupee is still expected to weaken to around 100 rupees to 1 US dollar. Strategists say that the measures taken by the RBI to slow down currency depreciation will bring short-term relief, but it is anticipated that the rupee will continue to weaken by the end of the year and in the middle of 2027, with the possibility of 100 rupees to 1 US dollar not being ruled out.

Next

• October 23: HSBC October Comprehensive Lightning PMI
• October 28: Indian industrial output for September