India Is Moving Fast to Catch Up in A.I. A Coastal City Fears the Fallout.

“A once-sleepy port destination has suddenly found itself at the center of India’s larger quandary over artificial intelligence, where many people question official enthusiasm over their city becoming the country’s data capital.

 

Visitors coming to the village of Tarluvada on the edges of Visakhapatnam city, on India’s southern coast, are greeted by a huge billboard with the faces of more than a dozen national and local politicians, declaring in bold colors: “Welcome, Google, Welcome!”

 

At the foot of a lush hill beyond, excavators flattened ground last month in preparation for a one-gigawatt data center that is part of Google’s $15 billion project here. The American tech giant is partnering with a billionaire ally of Prime Minister Narendra Modi, whose government sees data centers as essential to securing India’s place in the global build-out for the A.I. age.

 

Officials hope the investment in data centers will spur development and more foreign investment, according to Nara Lokesh, the information technology minister of the surrounding state of Andhra Pradesh, whose face is among those beaming from the welcome poster alongside Mr. Modi.

 

“For me, it’s not merely about the data center,” Mr. Lokesh said. “So the power electronics, the air conditioning, the building materials guy, the whole nine yards. We are now bringing all of them to my state to do the manufacturing.”

 

In addition to the Google project, which includes laying new subsea cables, an equally large data center is being built in Visakhapatnam by a joint venture that includes Brookfield Asset Management and India’s Reliance. When operational, the two will more than double India’s data center capacity relative to the end of last year.

 

But in Visakhapatnam, many residents are skeptical of the benefits.

 

Hyperscale data centers guzzle energy and water, and are not big job creators. These issues, which are particularly acute in India, have already spurred opposition in the United States, where data center projects worth tens of billions of dollars have been blocked or delayed by opposition from local communities.

 

The hasty pace of the projects in Andhra Pradesh has some residents, activists and former officials concerned that tech giants are coming here to exploit the Indian government’s desperate need for a place in the A.I. boom.

 

India is offering large subsidies to Google and its local partner, the Adani Group — from discounted land, energy and water, to extensive tax breaks — for the kind of project that communities in the U.S. are delaying.

 

Critics of the project say rules on environmental clearances have been bent to allow construction in ecologically sensitive sites, in a region that is considered water-stressed and sees supply disrupted in summer months. A lack of transparency and India’s entrenched tendency to quash dissent have only deepened their anxiety, with information scarce on where the water and electricity would be sourced from and who would bear the cost of the subsidies.

 

“This is not a defense deal, this is a developmental project. Why should it be shrouded in this opacity?” said V.S. Krishna, a campaigner with the Human Rights Forum, which operates in the region. “This whole region is being asked to absorb an enormous amount of infrastructure cost, environmental risks, without a public debate.”

 

Google’s partner in the project, the billionaire Gautam Adani, is seen as a close ally of Mr. Modi whose wealth has mushroomed during Mr. Modi’s 12 years at the helm; he has a reputation of getting his way on big projects.

 

Google executives and officials from the Adani subsidiary involved in the project said they had factored such concerns into the project’s planning to make sure they avoided any water or energy burden on the local community.

 

India Lagging

 

For India’s leaders, the immediate outlook for the world’s most populous nation in the global A.I. race is sobering. Despite a huge market and world-class tech talent, India’s structural deficiencies have relegated it to what a Morgan Stanley report called a “laggard” in building A.I. capability.

 

Billions of dollars in capital have left India over the past year for competitors like Taiwan and South Korea that make cutting-edge A.I. technologies such as chips. India is seen as less of an early innovation hub and more as a deployer of tech for use at home and abroad.

 

But to achieve even that in A.I., India needs to do something drastic to make up a glaring gap: While the country produces roughly 20 percent of the world’s data, its share of the world’s data center capacity has been a fraction of that.

 

For the ruling party in the state of Andhra Pradesh, the gap presented an opportunity.

 

Decades ago, N. Chandrababu Naidu, the state’s 76-year-old chief minister, helped turn nearby Hyderabad into a technology hub. He drew companies including Microsoft, around which the city built a lucrative industry. Since returning to power two years ago, he has managed to attract a quarter of all investment in India, including Google’s, to his state, with the mantra “speed, speed, and speed.”

 

The state government gave Google a 25 percent discount on land, and handsome subsidies on water and electricity.

 

Mr. Naidu brought another key factor: leverage in New Delhi, where his support was crucial to giving Mr. Modi a third term in charge.

 

Indian laws require foreign companies that keep data in Indian facilities to pay Indian taxes. Google wanted that changed, and was also hoping for even bigger tax cuts from the central government. Mr. Modi’s government delivered both.

 

“That’s something that we spearheaded,” said Mr. Lokesh, the technology minister, who is also Mr. Naidu’s son.

 

For Mr. Lokesh, the Google project is part of a larger effort to attract investment amid cutthroat competition among India’s southern states, which are seen as more advanced and easier to do business in than the north. He insisted the project followed “all due process,” and that the government was cutting red tape, rather than cutting corners.

 

He and his advisers said the Google project will create about 120,000 jobs during the construction stage, and about 60,000 jobs after the construction is complete. But critics have questioned those numbers, saying they do not track with what has been seen elsewhere for data centers of a similar size.

 

The project documents submitted for the environmental clearance, which included information on details like the number of parking spaces needed and how much water would be needed daily for flushing toilets, suggested there would only be a fraction of that number of employees.

 

Expanding heavily-automated industry could aggravate another headache India faces: generating employment for its population of 1.4 billion. The I.M.F. has said that A.I. could bring about a “tsunami hitting the labor market,” disrupting or shrinking the tech support industry that is so crucial to India’s economy.

 

Activists say the developers have also flouted environmental safeguards. One appeal to India’s National Green Tribunal, the country’s highest environmental court, submitted satellite images showing that construction work at the sites had begun long before the project received environmental clearance. One of the sites is near a wildlife sanctuary and another is on the catchment of a drinking water reservoir, which should have prompted a broader impact assessment from national authorities, they said.

 

A spokesman for the Adani subsidiary said it had “secured all necessary approvals from the respective statutory authorities,” and that it was “committed to developing digital infrastructure responsibly and in full compliance with applicable laws.”

 

Alexander Smith, a senior Google executive, said the company had conducted environmental audits.

 

The facilities in Visakhapatnam will rely on cooling technology that minimizes water consumption and will be independent of the potable water supply, he said. Google was also investing in clean energy generation and will “ensure no costs are passed on to local households, local businesses, or the state government,” he added.

 

But many residents are not convinced.

 

“Google is very clever — it has joined hands with Adani, because Adani can clear anything here in the government of India,” said E.A.S. Sarma, a former senior official in India’s ministries of finance and energy.

 

Mr. Sarma, who has a doctorate in energy planning, said the costs of the project would outweigh benefits: The expense of building new transmission lines alone would ultimately end up on people’s electricity bills.

 

“Every subsidy is a cost for the society,” he said.” [1]

 

1. India Is Moving Fast to Catch Up in A.I. A Coastal City Fears the Fallout. Mashal, Mujib; Kumar, Hari.  New York Times (Online) New York Times Company. Jul 16, 2026.