UPSC Prelims Practice Questions — India’s data centre boom is colliding with its climate reality

Question 1

Under the Union Government's common compute capacity framework, GPUs housed in empanelled commercial data centres are made available to startups, researchers and academia at a subsidised hourly rate. The empanelment of these service providers and data centres is operationalised by which one of the following?

Accepted Answer

The IndiaAI Mission, an Independent Business Division under the Ministry of Electronics and Information Technology

Answer

The Centre for Development of Advanced Computing, an autonomous scientific society under the Ministry of Electronics and Information Technology

Answer

The Software Technology Parks of India, an autonomous body under the Ministry of Electronics and Information Technology

Answer

The National Informatics Centre, the attached office of the Ministry of Electronics and Information Technology

Question 2

With reference to the growth of India's data centre sector, consider the following:
1. Installed data centre capacity in the country grew from about 375 MW in 2020 to more than 1,500 MW by 2025.
2. Investments of nearly USD 70 billion are already underway in the sector, with an additional USD 90 billion of announced projects.
3. About 38,231 GPUs have been onboarded through 14 empanelled service providers and data centres under the common compute capacity framework.
4. Data centre capacity in the country is officially projected to grow ten to twelve times by 2030.
Which of the above is/are correctly identified?

Accepted Answer

1, 2 and 3

Answer

1 and 2 only

Answer

2, 3 and 4

Answer

3 and 4 only

Question 3

Consider the following statements comparing the electricity demand reference points adopted in India's National Electricity Plan for 2026-27 and 2031-32:
1. All India peak electricity demand is projected at 277.2 GW for 2026-27, rising to 366.4 GW for 2031-32.
2. The Central Electricity Authority projects electricity demand in 2031-32 to be exactly double that of 2021-22, entirely on account of the load added by data centres and artificial intelligence workloads.
3. The transmission component of the National Electricity Plan has been finalised to serve a peak demand of 458 GW by 2032.
Which of the statements given above is/are correct?

Accepted Answer

1 and 3 only

Answer

1 and 2 only

Answer

2 and 3 only

Answer

1, 2 and 3

Question 4

With reference to the energy and capacity parameters adopted in India's National Electricity Plan, consider the following:
1. Electrical energy requirement is projected at 1907.8 BU for the year 2026-27.
2. Electrical energy requirement is projected at 2473.8 BU for the year 2031-32.
3. A total of 472 GW of installed capacity is targeted for addition during 2022-32, of which solar accounts for 279 GW and wind for 94 GW.
4. The finalised transmission plan up to 2032 for Central and State transmission systems carries a total estimated cost of Rs 2.44 lakh crore.
Which of the above is/are correctly identified?

Accepted Answer

1, 2 and 3

Answer

1 and 4 only

Answer

2, 3 and 4

Answer

1 and 2 only

Question 5

A draft national policy circulated for stakeholder consultation in 2025 proposed a long-duration tax exemption for data centre developers conditional on capacity addition, power usage effectiveness and employment targets, and sought input tax credit on capital assets such as construction and cooling equipment. This draft policy was prepared by which one of the following?

Accepted Answer

The Ministry of Electronics and Information Technology, Government of India

Answer

The Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry

Answer

The Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance

Answer

The Department of Telecommunications, Ministry of Communications, Government of India

Question 6

In the incentive conditions proposed for data centre developers, one of the performance targets is expressed in terms of 'Power Usage Effectiveness'. This parameter is best described as which one of the following?

Accepted Answer

The ratio of the total energy consumed by the entire facility to the energy consumed by its information technology equipment

Answer

The ratio of the electricity a facility procures from renewable sources to the electricity it draws from the grid over a year

Answer

The proportion of the contracted grid capacity of a facility that is actually drawn by it at annual peak load

Answer

The quantity of water in litres consumed by a facility for every unit of electricity that it consumes

Question 7

With reference to the framework announced in the Union Budget 2026-27 for foreign cloud service providers using India-based data centre infrastructure, consider the following:
1. Investments of nearly USD 70 billion are already underway in India's data centre sector.
2. Projects worth an additional USD 90 billion have been announced in the sector.
3. The exemption covers the entire income of an eligible foreign cloud service provider, including income earned from Indian customers, which is placed wholly outside the Indian tax net.
4. The benefit is automatically available to every foreign company that has a subsidiary in India, without any requirement of notification of the company or of the data centre facility.
Which of the above is/are NOT correct?

Accepted Answer

3 and 4

Answer

1 and 2

Answer

2 and 3

Answer

1, 3 and 4

Question 8

The Union Budget 2026-27 announced a tax holiday for eligible foreign cloud service providers operating through India-based data centre infrastructure, with the exemption commencing from Tax Year 2026-27. For how many tax years in all is the exemption available?

Accepted Answer

21 tax years

Answer

15 tax years

Answer

20 tax years

Answer

25 tax years

Question 9

The Reserve Bank of India's directive on Storage of Payment System Data required all system providers to bring their storage arrangements into conformity with the localisation mandate within a stipulated period from the date of the circular. That period was:

Accepted Answer

Six months

Answer

Three months

Answer

Nine months

Answer

Twelve months

Question 10

Under the Reserve Bank of India's localisation mandate for payment systems, the category of information that system providers must keep stored in a system only in India comprises which one of the following?

Accepted Answer

The full end-to-end transaction details and the information collected, carried or processed as part of the payment message or instruction

Answer

Only the customer identification particulars, namely name, account number and registered mobile number, captured at the time of on-boarding

Answer

All personal data of individuals located in India that is processed by any entity offering goods or services within Indian territory

Answer

The aggregated settlement and volume statistics that system providers periodically furnish to the Reserve Bank of India

Question 11

Consider the following statements comparing the technological response of the data centre industry to water and power intensity with the position taken by the Government on the same issue:
1. To minimise water usage, the industry adopts advanced cooling technologies such as direct-to-chip liquid cooling, adiabatic cooling and immersion cooling.
2. The industry deploys high density racks to support high-performance computing and artificial intelligence workloads, which further reduces power and water consumption.
3. The Government has stated that several formal concerns regarding water consumption in data centres have been received by it.
Which of the statements given above is/are correct?

Accepted Answer

1 and 2 only

Answer

1 and 3 only

Answer

2 and 3 only

Answer

1, 2 and 3

Question 12

In the absence of a dedicated central statute governing data centres, the extraction of ground water for uses including data centre cooling is regulated and controlled through guidelines notified vide S.O. 3289(E) dated 24 September 2020, subsequently amended in March 2023. These guidelines were issued by which one of the following?

Accepted Answer

The Ministry of Jal Shakti

Answer

The Ministry of Environment, Forest and Climate Change

Answer

The Ministry of Housing and Urban Affairs

Answer

The Ministry of Earth Sciences

UPSC Prelims Practice Questions — India’s data centre boom is colliding with its climate reality

Q6. In the incentive conditions proposed for data centre developers, one of the performance targets is expressed in terms of 'Power Usage Effectiveness'. This parameter is best described as which one of the following?

Q8. The Union Budget 2026-27 announced a tax holiday for eligible foreign cloud service providers operating through India-based data centre infrastructure, with the exemption commencing from Tax Year 2026-27. For how many tax years in all is the exemption available?

Q9. The Reserve Bank of India's directive on Storage of Payment System Data required all system providers to bring their storage arrangements into conformity with the localisation mandate within a stipulated period from the date of the circular. That period was:

Q10. Under the Reserve Bank of India's localisation mandate for payment systems, the category of information that system providers must keep stored in a system only in India comprises which one of the following?