Statement of Peoples’ Commission on Public Sector and Public Services (PCPSPS)
People’s Commission Urges Review of Concessions to Foreign AI/Data Centres
Date: 26.06.2026
AI/ Data centers, required for cloud computing, are known to be big guzzlers of water and electricity. A one-GW data centre consumes 11.4 TWH of electricity and 8.1 billion liters of water annually. If coal-based power plants largely supply electricity, as in India, one GW data centre release 8.1 billion tonnes of carbon into the atmosphere. In addition, data centers also cause pollution.
Of late, there is been a mad rush across the world to set up mega AI/ data centers. According to some projections, the cumulative global capacity of data centers will reach 200 GW during the next ten years, of which 50% will come up in the USA, 30% in Asia-Pacific and the rest in other regions including India.
Such a steep increase in data centre capacity would imply trillions of dollars of investments being made, with no certainty in terms of financial returns they yield. It is therefore possible that the data centre boom may turn out to be yet another bubble that will burst.
In view of their adverse impact on local water resources and electricity supplies, local communities in USA and Europe are opposing their setting up. In some States in the USA, the local governments are imposing on data centers higher tariffs for electricity and water.
Most US IT companies work closely with the Pentagon. Under the US Cloud Act and other data-related laws, the US government has the authority to force any US company, whether it is located in the US or in any other country, to provide access to the data stored with them.
In Europe, in view of fears of US data centers posing a threat to data sovereignty, the member countries are introducing regulations to encourage the development of European cloud services and putting in place regulations to protect data sovereignty against US companies.
As a result of community opposition against the setting up of data centers in the USA, the US IT companies like Google are shifting their data centre projects to countries like India where data sovereignty laws are inadequate, environmental regulation fragile and crony capitalism is rampant.
Political leaders in States like Andhra Pradesh are bending backwards to offer them land, electricity and water at heavily subsidised prices, coupled with capital subsidies, tax concessions and other subventions. As if this is not enough, the Union Finance Minister, in her 2026 budget speech announced a tax holiday specifically for “foreign” data centers till 2047 a measure that discriminates against domestic companies and runs counter to the need to develop indigenous capabilities in data storage and AI processing. For a GW foreign data centre capacity, it implies a cumulative revenue loss of Rs 95,000 crores. Already, as evident from Annexure 7 of the latest Receipts Budget, due to the wide range of tax concessions given to big businesses, the average effective rate of tax paid by big businesses in India is lower than that for small businesses. To that extent, the tax holiday announced for foreign data centers is regressive.
It is expected that around 17 GW of data centre capacity will come up in India by 2030. Most of them will be promoted by US IT companies through joint ventures with domestic companies like Adani, Reliance and TCS. That much of data centre capacity will consume 194 TWH, which will be 4 times the electricity demand of Delhi by 2030. Similarly, it will consume 138 billion litres of water by 2030, equivalent to 15-18 times the water demand of Delhi by that year. The carbon footprint of 17 GW capacity of data centers will be comparable to that of Delhi by 2030.
A 1 GW data centre requires 600-800 acres of land. Where arable lands are given to data centers, considering that the per capita arable land use in our country is 0.3 acres, 17 GW data-centre capacity will displace more than 30,000 marginal farmers, mostly Dalits, dislocating their lives and livelihood. They are rarely paid enough compensation that matches their loss of livelihood.
In Visakhapatnam, two sites handed over to a foreign AI/Data Centre conglomerate are located in forest lands, one of them also located in an eco-sensitive zone notified by MOEF. The land given to the data centre in the heart of Visakhapatnam is such that the structure once it comes up will block water inflows into an important water source, Mudasarlova Reservoir, which provides drinking water for the city’s residents. Once cleared, that site located in the reservoir’s catchment will silt the reservoir, further compounding the problem of its ability to provide drinking water for the people. That data centre will also add its own pollutants to the water stored in the reservoir, adversely impacting the health of the people.
Considering the fact that both the Centre and the States are showering huge concessions on the IT companies that are setting up data centers, it implies that small landholders whose lands are forcibly acquired and the tax-payers would be subsidising the operations of IT companies like Google who earn trillions of dollars of profits annually.
In terms of employment opportunities, one GW data centre may at best offer not more than 1000 jobs. The States, in their eagerness to invite those US IT companies have rarely committed them contractually to provide even that much local employment.
In AP, in their eagerness to please the US IT company, Google, the local political leadership has notified its data centre as a “DISCOM”, implying that the data centre would no longer be considered as an industrial consumer that the State DISCOM, namely, APEPDCL would serve, but at the same time, the State generation and transmission utilities as well as APEPDCL would continue to have the responsibility of investing on the required additional generation and T&D facilities. Had the data centre been APEPDCL’s consumer like any other industrial consumer, it would have been subject to the usual industrial tariff from which APEPDCL would have cross-subsidised rural electrification and electrification of disadvantaged consumer groups. As a result of the questionable notification issued by the State government favoring the data centre, the State power companies would be forced to bear the liability of Rs 500-700 Crores of additional investment on T&D network. This would get translated into raising tariffs for retail consumers by Rs 0.20-0.30 per unit. In addition, the State generation companies will also have to set up additional generation capacity at a higher marginal cost.
Data Centers, which work for more than 90% of the time thought the year impose a heavy demand on the State power companies. Fluctuations in demand in a data centre would threaten grid stability.
It is ironic that in countries like the USA, the local regulators are imposing higher electricity tariffs on data centers, whereas our political leaders are treating them with kid gloves and offering them subsidised tariffs.
The legality of the State notifying a bulk consumer like the Google data centre as a DISCOM is questionable.
We feel that the States, wherever data centers are being set up, should commission an independent study to assess the technical and financial impact of a data centre on the grid and the T&D network, and on cost of supply of electricity to other retail consumers and place such a study in the public domain and for the State Electricity Regulatory Commissions to see.
Considering that the social costs of data centers outweigh the social benefits, we appeal to the Centre and the States to revisit the concessions offered to them at the cost of tax payers, electricity consumers, land losers and the public at large.
India generates nearly 20% of the world’s data due to its massive digital user base and vast mobile consumption. However, only about 3% to 10% is stored and processed domestically. The vast majority of Indian-generated data is exported, processed abroad by global tech giants, and then sold back.
The Ministry of Electronics and Information Technology (MEITY) had come with a data centre policy in 2020 but it has not finalised it. It is high time that we put in place a comprehensive data centre policy that lays emphasis on developing indigenous capabilities in data storage, data processing and AI applications. Our strategy should define a central role for CPSEs and involve domestic academic institutions and start-ups.
India should also put in place a robust legislative framework for safeguarding the data privacy of individuals and legislative instruments that can block US IT companies from providing access for US authorities to strategic domestic data bases.
In the long run, India should develop its own well-encrypted domestic email and social media platforms so that we may minimise our dependence on foreign-controlled digital platforms.
In particular, we feel that India should revisit the present arrangement of foreign agencies like Elon Musk’s SpaceLink using our satellite spectrum. India needs a robust navigational system in the place of GPS for both civilian and defence uses. The existing NAVIC system should be strengthened by placing more dedicated satellites in the orbit with state-of-the-art atomic clocks.
People’s Commission on Public Sector and Public Services
About Peoples’ Commission on Public Sector and Public Services (PCPSPS): Peoples’ Commission on Public Sector and Services includes eminent academics, jurists, erstwhile administrators, trade unionists and social activists. PCPSPS intends to have in-depth consultations with all stakeholders and people concerned with the process of policy making and those against the government’s decision to monetise, disinvest and privatise public assets/enterprises and produce several sectoral reports before coming out with a final report. Here is the first interim report of commission- Privatisation: An Affront to the Indian Constitution.
For further details, please contact:
Thomas Franco
Former General Secretary, All India Bank Officers’ Confederation & People First
Contact: +91 9445000806
Email: reclaimtherepublic2018@gmail.com