Why in News?

Data centres are emerging as critical infrastructure supporting India's expanding digital economy, enabling digital services, e-Governance, cloud computing and AI applications. Demand for computing capacity, data storage and high-speed connectivity is rising rapidly.

Key Facts About Data Centres

  • Definition: A secure facility housing computing, storage and networking equipment to store, process, manage and distribute digital information.
  • Role: Support online banking, e-Governance, digital payments, cloud computing, AI and emerging technologies.
  • Capacity Growth: Installed power capacity grew from ~375 MW (2020) to 1.57 GW (August 2026); projected to reach ~8 GW by 2030.
  • Investment: Nearly USD 70 billion investments underway, plus USD 90 billion in announced projects.
  • NIC Network: National Data Centres at Delhi, Pune, Hyderabad and Bhubaneswar, plus 37 smaller Data Centres at State Capitals.

Key Technologies Powering Data Centres

  • Power Infrastructure: 24×7 supply via UPS, backup generators and distribution systems.
  • Cooling Systems: HVAC, airflow management, liquid cooling for optimal temperatures.
  • IT Infrastructure: Servers; storage via HDDs and SSDs; security systems.
  • Networking: Routers, high-speed switches, fibre-optic connections.
  • Management & Automation: Virtualisation (multiple VMs on one server), automation tools for workload management.

How a Data Centre Processes a Digital Request

  1. User request initiation → 2. Security layer → 3. Load balancer distributes requests → 4. Application server (may use APIs) → 5. Database server retrieves data → 6. Response delivery.
  • Processing chain: Connect → Receive → Network → Process → Store → Secure → Respond.

Policy Measures Enabling Growth

  • Infrastructure Status (Budget 2022-23): Data centres included in the Harmonized List of Infrastructure — easier access to long-term, low-cost financing.
  • Tax Incentives (Budget 2026-27): Tax holiday for eligible foreign cloud service providers until 2047 (Tax Years 2026-27 to 2046-47) using India-based data-centre infrastructure.
  • Semicon India Programme 2.0 (July 2026): Outlay of ₹1,27,500 crore under the India Semiconductor Mission (ISM).
  • IndiaAI Mission: Allocation of ₹10,371.92 crore for a comprehensive AI ecosystem.
  • Electronics Components Manufacturing Scheme (ECMS): Support raised from ₹22,000 crore to ₹40,000 crore.
  • PLI Scheme 2.0 for IT Hardware: Promotes domestic manufacturing of servers and digital infrastructure equipment.

Strategies for Sustainable Growth

  • Energy Demand: CEA projects data-centre electricity demand may reach 17 GW by 2031-32.
  • Renewable Energy Promotion: Green Energy Open Access Rules, Green Energy Corridor Scheme, National Green Hydrogen Mission, Solar PV Modules Programme, Solar Park Scheme.
  • SHANTI Act: Enables nuclear energy support for AI/data centres; framework for Small Modular Reactors (SMRs) and Micro Nuclear Reactors.
  • BIS Standards: Technical committee LITD 31 (Cloud Computing, IT and Data Centres).
  • Energy Conservation: BEE's ECBC 2017 and ECSBC 2024.
  • Advanced Cooling: Direct-to-chip liquid cooling, adiabatic cooling, immersion cooling, closed-loop liquid cooling.
  • Water Management: Groundwater extraction regulated under Ministry of Jal Shakti guidelines.

Significance

  • Backbone of digital transformation: governance, financial inclusion, AI innovation, economic growth.
  • Supports a secure, sovereign and sustainable digital infrastructure aligned with Viksit Bharat 2047.

PYQs

  • Prelims 2020: AI can effectively do — disease diagnosis, text-to-speech, etc. (Ans: 1, 3 and 4 only).
  • Mains 2015: Discuss advantages and security implications of cloud hosting of servers vis-à-vis in-house hosting for government businesses.

Mains Practice Question

Data centres have emerged as the backbone of India's digital economy. Discuss their significance and examine the challenges associated with their rapid expansion.