Relevance: GS-2 (Governance & Policies) & GS-3 (Economy, Infrastructure & Environment) | Th New Indian Express

1. The Core News: Why Build Data Centres?

India is a global leader in data usage, but most of our data is stored outside the country.

• The Problem: India creates 20% of global data but stores less than 3% within its own borders.
• Digital Sovereignty: Relying on foreign servers is a risk to national security and privacy. To achieve Digital Sovereignty, India needs to store its data locally.
• The Andhra Hub: Andhra Pradesh, especially Visakhapatnam, is becoming a major center for this infrastructure.

2. The Andhra Model: Administrative Innovations

The state is using new legal and technical methods to support these “power-hungry” projects:

• Deemed Distribution License: Under the Electricity Act, 2003, the state has given some projects a special license. This allows data centres to build their own solar plants and manage their power independently, bypassing the public grid and avoiding extra surcharges.
• Infrastructure Status: Data centres now have “Infrastructure Status” (granted in Union Budget 2022-23), which helps companies get bank loans at lower interest rates.

3. The “Water-Energy Nexus”: The Resource Conflict

While data centres are good for the economy, they create a massive demand for natural resources:

• The Water Problem: Data centres generate intense heat and need millions of litres of water for cooling.
• The Agrarian Conflict: Andhra Pradesh has a very narrow water surplus (only about 5% extra water according to the 2026-27 budget). Diverting this freshwater to industries might lead to a shortage for farmers (the Agricultural Sector).
• Solutions: To save freshwater, the government is planning desalination plants (turning seawater into fresh water) and using water from major projects like Polavaram.

4. Legal and Policy Frameworks 

To score better, link the topic to these official frameworks:

• DPDP Act, 2023: The Digital Personal Data Protection Act pushes for secure local storage of critical citizen data.
• EIA (Environmental Impact Assessment): Because these projects use so much land and water, they must undergo strict EIA to ensure they don’t damage the local marine life or coastal ecology.
• Draft National Data Centre Policy (2020): Aimed at making India a “Global Data Centre Hub” through single-window clearances and stable power supply.

5. The Way Forward

Andhra Pradesh’s success depends on balancing technology with ecology:

• Closed-Loop Cooling: The government should mandate technologies that recycle water instead of wasting it.
• Heat Reuse: Administrators should explore ways to use the heat generated by these centres for other municipal or industrial purposes.
• Administrative Blueprint: How Andhra manages its water and power will become a “lesson” or blueprint for other Indian states.

UPSC Value Box

• Digital Sovereignty: A nation’s power to control its own digital data and infrastructure.
• Water-Energy Nexus: The relationship between the water used for energy production and the energy used for water supply.
• Deemed Distribution License: A legal status allowing an entity to act as an electricity supplier for its own needs.

With reference to the development of Data Centres in India, consider the following statements:

1. Data centres and energy storage systems have been granted “Infrastructure Status” in India, allowing them easier access to institutional credit.
2. Under the Electricity Act, 2003, a “deemed distribution license” can be used by industrial units to manage their captive power needs.
3. According to current data, India stores more than 50% of the total global data it generates within its own geographical boundaries.

Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 and 3 only (c) 1 only (d) 1, 2, and 3

Correct Answer: (a) 1 and 2 only