Govt asks Microsoft to set up data centres closer to power generation sites

The government on Monday asked Microsoft to locate future data centres closer to power generation sources rather than near cable landing stations, with Electronics and IT Secretary S Krishnan saying this would cut costs for both the company and the country.

Speaking at the launch of Microsoft's fourth India cloud region in Hyderabad, Krishnan said it was easier and more economical to build data centres near power sources than near coastal cable landing hubs such as Chennai.

"It will be much more economical if you go closer to where the power itself is generating," he said, adding that the government would continue to facilitate faster approvals to meet the requirements of both the country and the world.

Microsoft on Monday formally launched its fourth India cloud region, in Hyderabad, as part of its $20.5 billion investment commitment to the country's digital and AI infrastructure.

The India South Central region, which became generally available on August 6, joins the company's existing regions in Pune, Chennai and Mumbai.

Krishnan called the launch significant for strengthening India's data centre and AI infrastructure, and said the country needs to simultaneously access the best global technology and build domestic, sovereign computing capacity.

He said India's scale of 1.4 billion people, along with its growing digital public infrastructure, generates large volumes of data that form a "treasure house" for AI applications, giving the country the potential to become "the application powerhouse of the world".

Krishnan said India's tax policies, ease of doing business, and the new telecom law permitting easier interconnection of facilities had made it simpler to build and connect a data centre to the grid in India than in many other countries.

The Hyderabad facility uses effectively zero water for cooling, relying on air-cooled chillers instead of traditional water-based systems, Microsoft India and South Asia President Puneet Chandok said.

He noted that the country has about 2 GW of data centre capacity, which is set to rise to 6-7 GW by 2035, with over $100 billion in investments already committed.

India would emerge as an AI infrastructure hub not just for itself but for Asia and the Global South, Chandok said.

In a video message, Microsoft Vice Chair and President Brad Smith said the new region would give organisations in India, and more broadly Asia, more capacity, greater resilience and more choice.

The expansion comes at a time of rapid digital growth in the country.

According to data from research firm IDC, India's public cloud services spending is forecast to reach $45.7 billion by 2030, growing at an annual rate of 22.2%, with AI spending expected to grow at double that pace.