The Backbone of Digital India
From UPI transactions and streaming movies to cloud computing and the rise of artificial intelligence, data centres are the physical infrastructure powering India's digital transformation. They are vast, secure buildings filled with servers that store,
process, and distribute the data we use every day. As India aims to become a global technology hub, the demand for data centre capacity has exploded. The country's capacity has grown from just 375 megawatts in 2020 to over 1,500 MW today, with projections showing a massive increase in the coming years. This rapid expansion is crucial for economic growth, but it comes with a significant environmental cost.
A Growing Environmental Footprint
Data centres are among the most energy-intensive buildings in the world. They require a constant, massive supply of electricity to run servers and, just as importantly, to cool them down. This immense power draw puts a strain on the national grid. Beyond electricity, their biggest thirst is for water, which is the primary medium for most large-scale cooling systems. In a country where many regions already face water stress, the prospect of diverting billions of litres of water for data centres is a major concern. This has led to protests by environmental groups and local communities in areas like Visakhapatnam, where large data and AI hubs are planned.
The New Regulatory Thresholds
In response to growing concerns, the Union government has clarified the rules. The Ministry of Environment, Forest and Climate Change (MoEFCC) recently stated that while data centres do not have their own special category for environmental clearance, they are not exempt from oversight. They fall under the existing Environmental Impact Assessment (EIA) Notification of 2006. A prior environmental clearance becomes mandatory if a data centre is part of a building or construction project with a built-up area exceeding 20,000 square metres. The threshold is even larger for township projects, which trigger a review if they cover over 50 hectares or include 1,50,000 square metres of built-up area.
What the Review Involves
When a project crosses these thresholds, the proposal must be submitted to the State Environment Impact Assessment Authority (SEIAA) for approval before construction can begin. During this appraisal, officials examine several critical environmental parameters. These include the availability of freshwater in the region, a detailed water balance report, and plans for managing, recycling, and reusing greywater. Based on this assessment, the SEIAA can prescribe specific environmental safeguards that the project must adhere to. Furthermore, the operational phase of the data centre is still governed by existing laws like the Water Act and Air Act, with compliance monitored by State Pollution Control Boards.
A Subject of Debate
The government's clarification provides a clear regulatory path for investors, but it has not satisfied all stakeholders. Environmental activists argue that treating a data centre as just another large building project is a mistake. They contend that the unique and intense resource consumption of these facilities—especially their massive electricity and water demands—warrants classifying them as major industrial projects. Such a classification would mandate a more rigorous assessment process, including public consultations, which are not always required for building projects. The current framework, they argue, may not be robust enough to manage the cumulative impact of dozens of large-scale data centres.
