Can Naidu’s New AI Bet Deliver What His Last Tech Boom Didn’t?
Two decades after the IT boom, Naidu is now betting on AI data centres. Big investments are flowing in, but jobs and environmental costs remain unanswered.
The Gist
Andhra Pradesh Enters the AI Data Centre Race
A joint venture has unveiled an $11 billion plan for an AI-native data centre in Visakhapatnam, following a $15 billion investment by Google and Adani Group.
- Chief Minister N Chandrababu Naidu aims to position Andhra Pradesh as a tech hub.
- Data centres face environmental challenges, including high energy and water consumption.
- Naidu's strategy may not generate widespread employment, as data centres are increasingly automated.
The global race to build the data centres that power artificial intelligence (AI) has arrived in India. It has now reached the coastal state of Andhra Pradesh, pulled in by an old hand at the game.
A joint venture of Reliance Industries, Brookfield and Digital Realty has just announced an $11 billion plan to construct a sprawling, “AI-native” data centre in Visakhapatnam.
This comes just a month after Google and the Adani Group declared a similar $15 billion investment in a data centre in the same city.
Birth Of Cyberabad
Suddenly, a state often overlooked in India’s tech narrative is at the epicentre of a $25 billion bet on the nation’s digital future.
The man credited with this coup is the state’s chief minister, N Chandrababu Naidu.
Two decades ago, as the leader of a united Andhra Pradesh which included the now distinct state of Telangana and its capital Hyderabad, he waged a successful campaign to pull investment away from Karnataka.
He pitted himself against Bangalore, the country’s established tech capital, with the slogan “Bye Bye Bangalore, Hello Hyderabad.”
His understanding of what built a tech ecosystem was strikingly granular.
In a 2004 interview, he explained to me and my colleagues that Hyderabad, the state capital at the time, needed a vibrant nightlife to attract the young men and women who would work for global tech firms.
It was a prescient, if unconventional, insight for an Indian politician at the time, particularly one as rustic as Naidu.
The gamble worked. American giants like Microsoft and GE were among the first to plant their flags.
Microsoft’s 1998 development centre in Hyderabad, its first outside the United States, was widely attributed to Mr Naidu’s personal persuasion of Bill Gates.
Whole new districts, like the aptly named Cyberabad, sprouted from the ground.
Today, Hyderabad is a buzzing metropolis with robust infrastructure and a thriving economy that extends into pharmaceutical research and more, far beyond its original IT roots. The city’s explosive real estate growth — and prices — are a testament to its success.
Yet, that success did not translate into political victory.
In a move that stunned the urban commentariat, Naidu’s party was roundly defeated in the 2004 state elections. The reasons were complex — a mix of rural distress and anti-incumbency that his urban tech boom could not overshadow.
Naidu’s New Challenges
Now, twenty years later, he is back, and his target has shifted from software to the essential hardware of our time: data centres.
But this new prize comes with its own set of challenges.
The first is environmental. Data centres are notorious for their immense energy and water demands. As the economist and former Planning Commission member Mihir Shah and Sunil Mani recently argued in an article in Business Standard, the unchecked growth of these “water-guzzling” facilities could strain fragile coastal ecosystems.
From Britain to Singapore, communities have faced blackouts and water shortages driven by data centre expansion.
The authors rightly insist that India must integrate environmental sustainability from the start, demanding transparency on water footprints and pushing for renewable energy and advanced recycling. This is not a secondary concern; it is a prerequisite.
The second challenge is human.
Unlike the GE and Microsoft offices of the 2000s that created thousands of jobs for a young, educated workforce, data centres are not manpower-intensive.
They are vast and automated cathedrals of computing power.
The cruel irony is that the AI they empower is explicitly designed to eliminate jobs. We may not know the scale or the timeline, but the direction is clear. The economic transformation Naidu is chasing now may not generate the widespread employment that typically fuels political capital.
Naidu’s comeback is a masterclass in identifying a new growth engine for a state traditionally known as India’s “rice bowl.” He is pulling the data centre boom away from its traditional home on the west coast, where Mumbai alone hosts over half of India’s capacity.
He may well create an economic win for Andhra Pradesh. The investments are real, and the momentum is palpable.
Naidu is betting his and his state’s future on the power of AI. He must hope that this time, the rewards are not just monumental, but also palpable to the people he serves.
