Indian states are welcoming massive data centres with incentives but what do the people get out of it?

There is competition among Indian states to welcome multi-billion dollar data centres with subsidies, tax holidays and electricity grid and water priorities. But does this translate into jobs, or some other form of social service payments for the local communities. “No one is looking into that,” says Sharmila Chavaly, a former civil servant and an expert on infrastructure projects.

“All we are looking at is, how can I incentivise a data centre to be set up in my state? We are not looking at what are the commitments we can get for this, because when we give, say, a tax holiday for 20 to 30 years, when we give them grid connection priority, etc., we need to look at certain commitments from them,” she said to Sidharth Bhatia in a podcast discussion.

Data centres require a lot of electricity and water to cool down the equipment, resources that may be scarce in many areas. In Vishakapatnam, locals and environmental activists have protested against the 16 billion dollar Google-Adani project which is being constructed. “The centre is coming up abutting a wildlife and natural reserve and there are fears the environmental checks that were required were not followed.”

After the mandate by RBI, SEBI and others that Indian data must be stored within the country, many companies have plans to set up data centres here. Besides, India generates a lot of data and is therefore an attractive place to be.

There are many alternative models available around the world for setting up centres which don’t impose on the local communities. “Malaysia offers quick electrical connections, but two states they're using sewage water which is recycled.” Chavaly said Tamil. Nadu has not joined the “rat race” in rushing to invite data centres.