India’s artificial intelligence data centre faces climate threats just as the country accelerates its ambitions to become a global hub for AI, cloud computing, and digital infrastructure. Billions of dollars are being invested in new data centres across India to support growing demand for artificial intelligence, machine learning, cloud services, and digital transformation. However, a new report by climate risk consultancy XDI warns that rising temperatures, extreme weather events, and infrastructure vulnerabilities could threaten the long-term reliability and profitability of these facilities.

The study found that India ranks as the 11th most climate-exposed country globally for planned data centres, highlighting a growing challenge for one of the world’s fastest-expanding digital economies.

Climate Risks Are Emerging as a Major Concern

The report, titled 2026 Global Analysis of Planned Data Centres for Physical Climate Risk and Resilience, assessed 2,595 planned data centres worldwide. Researchers examined the potential impact of direct climate damage, operational disruptions caused by extreme heat, and failures in critical supporting infrastructure such as electricity, transport, water supply, and telecommunications.

While discussions around data centres often focus on energy consumption and water use, the study highlights that physical climate risks are becoming equally important.

Key Findings from the XDI Report

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Extreme Heat Emerges as the Biggest Threat

According to the report, extreme heat represents one of the most significant operational risks facing future data centres.

• Unlike floods or storms that can physically damage buildings, prolonged high temperatures reduce operational efficiency, increase cooling requirements, strain power infrastructure, and heighten the risk of electricity failures.
• More than 75% of planned data centres in India, Brazil, Mexico, Indonesia, and Spain were classified as facing high risks from heat-induced operational disruptions.
• Several Indian states, including Tamil Nadu, Telangana, and Karnataka, are expected to attract substantial AI and cloud infrastructure investments, ranking among the world’s most climate-exposed regions for temperature-related operational challenges.

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The Risk Extends Beyond Data Centre Walls

One of the report’s most important findings is that climate-related disruptions often originate outside the facility itself.

Even highly resilient data centres depend on a network of external systems, including power grids, telecommunications infrastructure, transportation networks, water supply systems, and logistics chains.

During extreme weather events, failures in any of these systems can interrupt operations even when the data centre remains physically unharmed.

XDI notes that productivity losses caused by indirect infrastructure failures could be up to ten times greater than losses resulting from direct physical damage.

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Building Climate-Resilient AI Infrastructure

The fact that India’s artificial intelligence data centre faces climate threats does not mean the outlook is negative. Rather, experts view planned projects as an opportunity to build resilience from the start.

The report emphasizes that site selection, engineering design, cooling technologies, backup power systems, and climate adaptation investments will play a crucial role in determining future performance and insurability. This is particularly important as insurance costs continue to rise. According to Swiss Re, global insurance premiums linked to data centre infrastructure could grow from $10.6 billion today to $24.2 billion by 2030.

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