Nageswaran & Poojari: Let's welcome data centres -- but on the right terms

Summary

AI hyperscalers have their eyes on India, but we must carefully weigh all commitment costs of hosting data centres against the benefits before extending scarce resources. The terms must be settled before we pay in advance.

Emerging markets don't have a lot of those data centres, and it's not coming, trust me." So said World Bank president Ajay Banga in New York last month. Even where an emerging economy can arrange the land, water, power and fiscal space they demand, policymakers should ask whether hosting them is the best use of scarce resources, and whether the incentives on offer have been weighed against their costs.

The resources that data centres need are largely spoken for in most developing economies. Every unit of power committed to a data centre is a unit not available to a factory, an irrigation pump, or a household still making its way up the energy ladder. Finances are no less contested. Water is a third constraint: cooling needs are rising while groundwater across much of the emerging world is depleting faster than it can be replenished.