Somewhere in Mumbai, Chennai, or Hyderabad, a new data centre is being announced. Reliance. Adani. Microsoft. Google. Amazon. The names change, but the story is the same: billions of dollars flooding into India's digital infrastructure, all racing to capture a slice of the country that produces 20 per cent of the world's data but hosts barely 1 per cent of global data centre capacity.
Since 2023, local and global technology firms have announced more than $32 billion in data centre investments in India. The excitement is justified. The ambition is real. But underneath the ribbon-cuttings and press releases lies a question that nobody in power seems eager to answer: where, precisely, is all the electricity going to come from? And, who is going to pay for it?
The scale of what is coming
India's data centre capacity stood at roughly 1,500MW at the close of 2025. Power consumption is expected to grow nearly fivefold, rising from 0.8 per cent to 2.6 per cent of national electricity generation. Some estimates, accounting for AI workloads, put that share as high as 6 per cent.
To put that in perspective: India is being asked to conjure up, from somewhere, the equivalent of several large states' worth of additional electricity demand, for an industry that employs relatively few people, pays for land at commercial rates, and whose primary beneficiaries are global technology corporations headquartered thousands of miles away. And this must happen on a grid that today struggles to keep the lights on in Bengaluru's tech corridors during peak summer, let alone in the towns and villages that still endure hours of daily load-shedding.
The American warning me must heed
The United States offers a vivid cautionary tale. In areas near major data centre clusters, wholesale electricity costs are as much as 267 per cent higher than five years ago. Residential bills in Georgia rose six times in two years to an average of $175 a month, driven by data centre demand alongside nuclear plant cost overruns. Over 25 data centre projects were cancelled in 2025 due to citizen protests, including $98 billion worth of projects blocked in a single quarter. Some 80 million Americans now struggle to pay their power bills.
India's political economy differs from that of America. The arithmetic does not.
The double threat: Power and water
Power is only half the problem. Data centres require vast quantities of water to cool continuously running servers. India’s data centre water consumption is projected to more than double: from 150 billion litres in 2025 to 358 billion litres by 2030. An S&P Global study estimates 60–80 per cent of India’s data centres will face high water stress this decade. India, as NITI Aayog has repeatedly warned, is among the most water-stressed major economies on earth. Chennai has already experienced near-total reservoir depletion within living memory. Cities like Bengaluru and Hyderabad face chronic groundwater crises. Jamnagar hosting a gigawatt-scale AI campus sounds impressive. Gujarat's water table is unimpressed.
What India urgently needs is a simple, non-negotiable rule: every data centre above a defined capacity threshold must be energy self-sufficient. It must generate or directly procure 100 per cent of its power from clean sources: through on-site solar, wind, captive green hydrogen, or Small Modular Reactors (SMRs). Not carbon credits. Not offsets. Actual, physical, dedicated power generation. The grid is not a commons for private profit. The burden of powering Big Tech should not fall on the family in Patna that already endures eight hours of load-shedding a day. Even in large cities such as Chennai, there is no continuous power. When summer sets in, the power situation gets much worse, with gensets roaring across all residences and industries.
The SMR opportunity India must seize
India already has the foundations for this. The 2025-26 Budget allocated ₹20,000 crore to develop at least five indigenous SMRs by 2033. The Bhabha Atomic Research Centre is developing three reactor variants, including a 200MWe unit and a compact 55MWe model, precisely the output range a large data centre requires.
Reliance Industries and Adani Power are among the industrial groups already exploring captive SMR deployment. Global tech firms (Microsoft, Amazon, Google) are pairing SMR contracts with US data centres right now. India has the policy architecture, the indigenous technology pipeline, and the industrial appetite. What it needs is a mandate that connects them.
The government should move on three fronts simultaneously: binding energy self-sufficiency rules for new large-scale data centres; fast-tracked regulatory clearances for captive SMRs and renewables co-located with these facilities; and a firm sunset date beyond which new hyperscale facilities may not draw from the public grid.
The bill will come due
India’s digital ambitions are worth pursuing. The only question is whether it arrives on India’s terms or on those of Big Tech. The government has shown it can move fast when the political will exists: GST was a bureaucratic miracle; UPI rewired commerce; Aadhaar enrolled a billion people in years. A clear, enforceable policy mandating energy self-sufficiency for large-scale data centres, combined with fast-tracked incentives for SMR deployment and captive renewables, is entirely within the state's capacity to design and implement.
Hence, set the rules now (before the industry is too large to regulate) or watch electricity bills rise, state finances buckle, and voters eventually do what those of Georgia did. The lights cannot afford to dim for a billion people so that the tech cloud stays bright for the few.
About the authors: Krishna V Giri is distinguished fellow and special advisor to the chairperson, and Payal Seth is fellow at Pahle India Foundation.
The opinions expressed in this article are those of the author/s and do not purport to reflect the opinions or views of THE WEEK.