Who actually sets the rules for India’s data centre boom, and are they good enough? India’s data centre capacity has nearly tripled since 2020, pulling in almost $95 billion in investment. But the policies meant to govern this industry- data protection, cross-border data flows, sustainability standards- are still catching up. So what can India learn from everyone else who’s already been through this?
Europe offers the strictest playbook. GDPR forced any company handling EU citizens’ data to prove its facilities met tough security standards, which ended up funneling serious investment toward high compliance data centres. The EU has since gone further, mandating that big facilities report energy and water efficiency, and building a public rating system, think energy labels, but for data centres. Ireland’s story is a cautionary one, data centres ballooned to nearly 14% of the country’s electricity use, and regulators eventually froze new grid connections in Dublin until facilities agreed to bring their own renewable power. The Netherlands hit similar grid limits and responded with targeted moratoriums.
The US took the opposite path, almost no federal policy, just states competing on tax breaks and fast permitting. That’s how Northern Virginia ended up hosting roughly 35% of the world’s data centre capacity. But the cracks are showing, grid operators have warned capacity is running out, and New York recently paused new hyperscale data centre permits statewide, the first such freeze in the country.
Singapore took a more surgical approach as it froze new approvals in 2019, built a strict sustainability framework, then reopened only for facilities using recycled water and meeting efficiency benchmarks. The result is a premium, world-class industry. The UAE, meanwhile, paired fast approvals with clear data sovereignty rules.
Where does India fit? On data protection, the journey from the 2017 Puttaswamy privacy judgment to the 2023 Digital Personal Data Protection Act was long and bumpy, but the law is now rolling out in phases through 2027. On infrastructure, India has made real moves, declaring data centres essential infrastructure for cheaper financing, tying capacity growth to the IndiaAI Mission, and offering a tax holiday through 2047 for foreign cloud providers using Indian facilities.
But gaps remain. There’s no unified national data centre strategy, no mandatory energy or water efficiency standards like Europe’s, and state policies vary widely, making multi-state investment tricky. The bigger stakes: laws like the US CLOUD Act mean American authorities can access data on US-company servers, anywhere, including data on Indian citizens. That makes keeping India’s data on Indian soil, under Indian law, a matter of genuine digital sovereignty.
The full article can be read in Chapter One Mag.
