ગુજરાતી
Despite decline in investment nationally, Gujarat approves 3 chip factories and data centers
Ahmedabad
Since June, foreign investment in India’s data center sector has declined. The main reason for this is opposition from local communities, who are concerned about the heavy consumption of water and electricity. As a result, many projects in states like Andhra Pradesh and Maharashtra have been stuck. In contrast, there is no opposition to such projects in Gujarat, making it easier for them there.
One such project is coming up in Jamnagar, Gujarat, which will consume a huge amount of water. Three factories are being set up to make chips required for data operations. These three units will require as much water as the entire population of Ahmedabad and Surat together uses daily. Additionally, there are plans to set up another chip manufacturing plant near Ahmedabad.
Also, power lines are being laid to meet the huge demand for electricity, which local farmers are opposing.
However, the voluntary organizations (NGOs) of Gujarat working in this sector seem to be completely inactive. Apart from this, the local people do not even have an idea of how much water will be consumed in this. Both the Gujarat state government and the central government have given subsidies worth billions of rupees to these industries. For example, Tata is the leader in Dholera, which has received Rs 44,000 crore; In return, the company has funded the BJP. Stuck investment projects
Since June 2026, foreign investment inflows into India’s data center sector have declined significantly. There has now been a big change in the sector where earlier deals were being done at a rapid pace. The pace of investment has slowed, and the average monthly funding is significantly lower than in the first half of the year. This decline is not just the result of market fluctuations; Rather, behind this is also the growing opposition at the grassroots level regarding the establishment and operation of these units.
Local opposition and regulatory delays
One of the main reasons for this decline is the protests at the local level. In areas such as Visakhapatnam, Andhra Pradesh, community groups have raised concerns about large-scale infrastructure projects—including a major development project involving Google. These concerns are primarily related to the potential environmental impacts near the Kambalakonda Sanctuary, and the huge strain these facilities will place on local water and power resources. The Andhra Pradesh High Court is reviewing these issues after a public interest litigation (PIL) was filed, adding to the uncertainty for developers.
A similar situation is being seen in Thane, Maharashtra, where local residents have expressed concerns about noise pollution and the pressure on the local power grid. Due to these protests, companies are being forced to reconsider their site selection decisions and increase transparency. Regulatory bodies are now closely scrutinizing environmental clearances, increasing both the time and cost of starting projects. For developers, addressing these local concerns is no longer a trivial task but has become a major operational challenge.
Financial impact and investors’ strategy
The data center sector is a capital-intensive business, requiring constant investment for expansion. When projects are delayed due to regulatory or social barriers, costs may increase, pressurizing financial returns.
The long-term future of India’s data infrastructure is deeply linked to the country’s growing AI (Artificial Intelligence) ambitions. Companies like Yotta Data Services are preparing to raise capital up to Rs 8,000 crore. To improve the business environment, the government has made some legislative changes—such as the ‘Taxation and Other Laws (Amendment) Bill, 2026’—aimed at reducing compliance difficulties for foreign companies. Investors should keep an eye on the timelines for commissioning of projects, the status of ongoing legal cases in key states, and how companies report their water and power consumption. (Google Translate from Gujarati)
