India's Adani Group Eyes $100bn Outlay on Data Centres by 2035

India’s Adani Group said on Tuesday it plans to invest $100 billion over the next decade to build “AI-ready data centres” powered by renewable energy.

The announcement, which comes as the country hosts a five-day global AI summit in New Delhi, will boost the Modi government’s push to become a global artificial intelligence hub.

India is expecting a surge of spending on AI infrastructure, ‌with tech giants like Microsoft, Google, Amazon, Meta and OpenAI look at setting up major data centres, along with local companies, such as Reliance and Tata.

ALSO SEE: Tech Leaders Fly to India For AI Summit Amid a Raft of Concerns

The AI summit will attract 20 national leaders and 45 ministerial-level delegations – with the key day on Thursday – who will rub shoulders with tech CEOs, such as Sam Altman of OpenAI and Google’s Sundar Pichai.

The $100 billion investment would catalyse an additional $150 billion in spending across “server manufacturing, advanced electrical infrastructure, sovereign cloud platforms and supporting industries,” the Adani Group said in a statement.

“Together, this is projected to create a $250-billion AI infrastructure ecosystem in India over the decade,” it noted.

Partnerships with Google, Microsoft

The sprawling ports-to-power conglomerate said its vision is “anchored” by key partnerships with Google – which aims to establish a massive data centre campus in the coastal city of Visakhapatnam – and Microsoft.

“The Adani Group is also in discussion with other major players seeking to establish large-scale campuses across India, thereby further cementing its position as India’s premier AI infrastructure partner,” the statement added.

Last year India leapt to third place – overtaking South Korea and Japan – in an annual global ranking of AI competitiveness calculated by Stanford University researchers.

But despite plans for large-scale infrastructure and grand ambitions for innovation, experts say the country has a long way to go before it can rival the United States and China.

Tax breaks, water shortage fears

India has promised not to impose any taxes on foreign companies using data centres built in the country to provide services to global clients until 2047 on those outbound services.

But the firms will need to provide services to domestic customers through an Indian resale entity, the finance minister said early this month. That means New Delhi will still earn taxes from them.

Delhi also faces real challenges in bringing its data centre dream to fruition, because they require huge amounts of power and water to operate, and India already struggles to provide both those resources adequately.

In January, millions of people in the Indian capital lost access to water as six of the city’s nine major water plants shut down for more than a week due to huge levels of pollution in the city’s main water source — the Yamuna River.

Water scarcity is a big problem. In 2018, a government agency went as far as to say that the country was dealing with the “worst water crisis in its history”. And years of uncertain climates, heatwaves and droughts since have not helped.

Most of India’s data centres are also located in heavily populated urban centres like Mumbai and Hyderabad, which face a soaring demand for water.

Fears have already been expressed about data centres proposed by Google in Vishakapatnam and other cities. Days after the investment was announced, advocacy group the Human Rights Forum said Google’s data centres represent “a looming environmental, economic disaster”.