India wants to expand its digital infrastructure. A new NITI Aayog framework asks states to check whether local resources can support that growth—and what the public will receive.
Every investment proposal comes with promises. A data centre may bring capital, jobs and support for digital services. But the government considering it must also answer some basic questions. Where will its water come from? Can the electricity network handle the demand? Who pays for the upgrades?
NITI Aayog’s Data Centre Evaluation Framework puts these questions before states. It asks them to assess the resources a project needs alongside the benefits it promises.
The document offers guidance rather than a new layer of regulation. States can adapt its principles to their circumstances. Its recommendations cover electricity, water, location, economic benefits and accountability.
Where will the water come from?
A water connection alone does not answer whether a project has a dependable supply.
The framework asks states to examine water availability across seasons over a 20–30-year period. This assessment should include groundwater, rivers, municipal supplies, treated wastewater and the needs of existing users, particularly agriculture.
It also calls for checks on peak summer demand. Cooling requirements should reflect the local climate and the technology a facility plans to use.
The clearest safeguard concerns existing water users: a new allocation should not reduce their dependable supply.
Promises to use recycled water also need checking. A company may promise to use treated wastewater for cooling. Before approving the project, authorities should check that this supply will actually be ready when the facility opens. Otherwise, it could end up drawing freshwater needed by other users.
There are a couple of straightforward questions:
- What will the facility need during summer?
- Will alternative supplies be ready?
- What happens during a drought?
- How will existing users be protected?
Can the power network cope?
The framework asks authorities to assess electricity demand for the entire planned campus, including future expansion. They should also consider other existing and committed demand on the same part of the network.
Developers, electricity distribution companies and transmission utilities should jointly prepare a plan identifying the required upgrades, delivery dates and responsibility for costs.
Renewable-energy promises receive similar scrutiny. Authorities should recognise reductions in grid demand only when the proposed supply and storage arrangements meet conditions covering availability, timing, connectivity and metering.
The practical issue is whether the promised electricity will be available when each phase opens.
What does the public get?
The framework asks states to calculate the support they offer. This includes land, infrastructure, tax and duty concessions, utility support and capital assistance.
They should then assess the expected benefits, including local hiring, procurement, training, research and domestic industry participation. Government support should be released as companies meet agreed targets. Companies should report their progress, and payments should be paused if they fail to meet the conditions.
This gives citizens a useful question to ask: what lasting benefits will the project deliver for the assistance it receives?
Do communities have a say?
The document calls for a Community Impact Assessment covering water, traffic, drainage, noise, waste, land-use changes and local jobs. It includes consultation and grievance processes.
It also asks states to identify locations where development should be restricted because of water stress, hazards or inadequate infrastructure.
However, the wording needs clarification. While the main recommendation calls for a community assessment, the minimum-document list qualifies it as proportionate and applicable to large campuses “where warranted.” It does not clearly explain who makes that judgement.
The real test comes after approval
The framework proposes monitoring, audits and responsibility for delivering commitments. It also calls for publishing non-sensitive approval information.
These measures leave important questions for further reporting. Will communities see actual water and electricity consumption? Who will independently check compliance? What happens when commitments are missed?
The report does not establish that particular data centres have caused shortages. It provides a set of questions for assessing proposals.
Its value will become clearer when states apply those questions to real projects—and make the answers available to the people affected.
Clear Cut Research, Climate Desk
New Delhi, UPDATED: October 20, 2026 18:34 IST
Written By: Paresh Kumar
[The Author serves as the managing editor and the CEO of DevInsights]
