Why in news?

Google has announced a $15 billion investment over five years to establish an AI data centre in Visakhapatnam, Andhra Pradesh — its largest investment in India so far. Partnering with the Adani Group and Airtel, the project will include the development of a new international subsea gateway to strengthen digital connectivity.

The facility will become part of Google’s global network of AI data centres across 12 countries, supporting advanced computing and cloud services.

The investment comes amid strained India–US relations and the government’s push for swadeshi (local) technology adoption. The initiative also raises policy questions about whether India should incentivise large compute infrastructure to bolster its AI ecosystem and digital sovereignty.

What’s in Today’s Article?

• How AI Data Centres Differ from Traditional Ones?
• Google’s AI Hub: Collaboration to Build India’s Clean-Energy Data Centre
• India’s Data Centre Boom: Growth Potential, Energy Challenges, and the Nuclear Option

How AI Data Centres Differ from Traditional Ones?

• An AI data centre is different from a traditional data centre in terms of it being specifically tailor-made to support AI applications. 
• Traditional data centres that rely on CPU-based servers for hosting websites, storage, and business applications.
• However, AI data centres are designed to handle massive data processing and compute-intensive tasks like image generation, video analysis, and generative AI.
• They are powered by high-performance GPUs, requiring stronger power infrastructure and advanced cooling systems, making them far more energy-intensive than conventional facilities.
• According to an analysis, the new AI hub is expected to add $15 billion to US GDP (2026–2030) through increased AI and cloud adoption.
• It will create economic and technological opportunities for both India and the US, marking a transformative leap in global AI capability.

Google’s AI Hub: Collaboration to Build India’s Clean-Energy Data Centre

• Google’s AI data hub in Visakhapatnam, Andhra Pradesh is being developed with AdaniConneX and Airtel.
• The facility will use the same infrastructure that powers Google’s global services such as Search, Workspace, and YouTube.
• AdaniConneX, a joint venture between Adani Enterprises and EdgeConneX, will lead the construction and operation of the data centre network across India and provide 100% green energy for the AI hub.
• Subsea Gateway and Connectivity Expansion
  • A major component of Google’s investment is the construction of a new international subsea gateway on India’s eastern coast.
  • Multiple international subsea cables will land in Visakhapatnam, connecting to Google’s global network of over two million miles of terrestrial and subsea cables.
  • Airtel will assist Google in developing this connectivity backbone to enhance international data flow and latency performance.
• Sustainability and Energy Infrastructure
  • The project includes co-investments in new transmission lines, renewable power generation, and energy storage systems in Andhra Pradesh.
  • Both companies emphasised their commitment to clean energy and grid resilience, stating that the initiative will:
    • Support the AI data centre’s clean energy operations,
    • Strengthen India’s electricity grid, and
    • Promote energy security and sustainable infrastructure development in the region.
• Strategic Impact
  • The partnership positions India as a key player in global AI infrastructure, combining Google’s technological expertise, Adani’s green energy leadership, and Airtel’s telecom reach.
  • It underscores a shared commitment to sustainability, digital capacity expansion, and innovation-driven growth within India’s evolving AI ecosystem.

India’s Data Centre Boom: Growth Potential, Energy Challenges, and the Nuclear Option

• India’s data centre market is valued at around $10 billion, generating $1.2 billion in FY24.
• A report projects an addition of 795 MW of new capacity by 2027, raising total capacity to 1.8 GW.
• The sector is poised for robust growth driven by cloud computing, AI adoption, and digital infrastructure investments.
• Policy Concerns Over Incentives and Job Creation
  • Despite its promise, policymakers are debating whether to offer incentives for data centres due to their high energy demand and capital intensity with limited employment potential.
  • However, experts claimed that Google’s AI data centre in Visakhapatnam will create 1.88 lakh direct and indirect jobs, signalling strong regional economic benefits.
• Energy Demand and Cost Pressures
  • AI data centres are exceptionally energy-intensive.
  • The International Energy Agency (IEA) projects that global data centre power usage could double by 2026, posing challenges to achieving net-zero or carbon-negative goals by 2030.
  • Power infrastructure dominates operational economics:
    • 40% of total capex goes toward electrical systems.
    • 65% of operating costs stem from electricity consumption.
    • Setting up 1 MW of data centre capacity in India costs between ₹60–70 crore, highlighting the need for cost-efficient and sustainable energy sources.
• The Renewable and Nuclear Debate
  • While most firms rely on renewable energy, it faces limitations—intermittent generation and inadequate storage capacity.
  • This has led policymakers to explore nuclear energy as a clean, round-the-clock power source capable of meeting AI-era electricity demands.
  • The Indian government is reportedly open to using nuclear power for data centres, mirroring emerging trends in the United States, where AI-led data centre growth is accelerating reliance on nuclear-backed power grids.

Conclusion

• India’s data centre expansion represents a balancing act between digital transformation goals, energy security, and environmental commitments.
• The next phase of policy will determine whether India can become a global AI infrastructure hub while ensuring sustainable, reliable, and cost-effective energy to power its growing digital economy.