Google’s $15 Billion AI Data Centre in Andhra Pradesh: Powering India’s Digital Future

AI Data Centre Latest 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.

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.

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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.

Source: IE | BBC | ToI