Visakhapatnam, October 18, 2025 – In a seismic shift for India's southern tech landscape, Google has unveiled plans for a colossal $15 billion AI data center in Visakhapatnam, Andhra Pradesh, positioning the port city as the tech giant's largest AI hub outside the United States. The announcement, made on October 14 during a high-profile event in New Delhi, has ignited a fierce inter-state rivalry, with Karnataka's leaders decrying it as a "major blow" to Bengaluru's Silicon Valley aspirations, blaming crumbling infrastructure and political missteps for the snub.
The project, spanning five years and valued at ₹1.25 lakh crore, will feature a 1-gigawatt campus developed in partnership with AdaniConneX—a joint venture between Adani Enterprises and EdgeConneX—and telecom major Bharti Airtel. It promises to supercharge Google's suite of AI-driven services, from Search and Workspace to YouTube, while injecting gigawatt-scale compute power into India's burgeoning digital ecosystem. Google Cloud CEO Thomas Kurian hailed the move as part of a "long-term vision" to propel India's AI ambitions, emphasizing its role in fostering economic ties between New Delhi and Washington. Andhra Pradesh Chief Minister N. Chandrababu Naidu, beaming at the reveal alongside Union IT and Finance Ministers, projected it would spawn 1.88 lakh direct and indirect jobs, transforming Visakhapatnam into a global connectivity nexus.
But what tipped the scales in favor of Andhra Pradesh over perennial favorite Karnataka? Industry insiders and official disclosures point to a potent mix of strategic infrastructure, aggressive incentives, and forward-thinking energy policies—factors where Visakhapatnam outshone Bengaluru's congested corridors.
At the heart of the decision lies Visakhapatnam's unparalleled connectivity edge. As India's eastern coastal gateway, the city boasts multiple international undersea cable landing stations, seamlessly linking into Google's sprawling 2 million-mile global network of terrestrial and subsea cables. Airtel's involvement will pioneer a new international subsea gateway here, ensuring low-latency data flows critical for AI workloads. Analysts note that this "natural advantage" was overlooked by Karnataka, which failed to capitalize on Mangaluru's similar coastal potential despite its proximity to major fiber-optic hubs. "Vizag isn't just a port; it's a digital bridge to the world," quipped a Google spokesperson, underscoring how such infrastructure slashes operational costs by up to 30% compared to landlocked or congested alternatives.
Sustainability sealed the deal. The campus will run entirely on clean energy, powered by AdaniConneX's green initiatives, including co-investments in transmission lines, renewable generation, and cutting-edge storage systems to bolster Andhra's grid resilience. This aligns with Google's carbon-neutral mandate and sidesteps the energy guzzling pitfalls plaguing older data centers—where electricity can devour 65% of operating expenses. Karnataka, grappling with power shortages and erratic renewables in its urban sprawl, couldn't match this eco-friendly pitch.
Yet, the elephant in the boardroom is Andhra Pradesh's lavish incentive package, pegged at a staggering ₹22,000 crore—equivalent to about 14% of the project's value. The state is doling out 480 acres of prime land at a 25% discount on market rates, full waivers on stamp duties, a 25% rebate on industrial water for a decade, and exemptions on electricity duties. Power tariffs, already at ₹5-7 per unit, get slashed by a rupee apiece for 15 years, netting a 15-20% savings. During construction, Google scores 100% reimbursement of State GST, capped at ₹2,245 crore. "These are standard perks, not giveaways," insisted an Andhra official, drawing parallels to deals inked elsewhere. Naidu's TDP-BJP alliance, bolstered by ₹10,000 crore in central aid for Amaravati (part of a ₹15,000 crore Union Budget pledge), reportedly sweetened the pot further, giving Hyderabad an inside track.
Karnataka's offerings pale in comparison. Its data center policy dangles five-year electricity duty exemptions, 10% land subsidies outside Bengaluru (up to 10 acres), stamp duty waivers, and a modest ₹1.25 crore green power reimbursement—sans land price cuts or GST refunds. With the state nursing a revenue surplus of ₹13,496 crore but facing urban decay, officials like IT Minister Priyank Kharge lambasted Andhra's largesse as an "economic disaster." "How can a state drowning in ₹10 lakh crore debt and a 3.61% revenue deficit afford ₹22,000 crore in subsidies?" Kharge fired on social media, accusing Naidu of "boasting about investments while concealing the bill." He jabbed at Bengaluru's AI prowess—home to a third of India's talent pool—questioning why such fiscal recklessness trumps merit.
The barbs flew fast and furious. Andhra IT Minister Nara Lokesh, Naidu's son, trolled back on X with viral flair: "They say Andhra food is spicy. Seems some of our investments are too. Some neighbours are already feeling the burn!"—complete with chili and flame emojis. The quip, amassing millions of views, amplified a months-long feud, from Lokesh's digs at Bengaluru's potholes to Kharge's retorts on Andhra's "growth fantasies." Janata Dal (Secular) leader H.D. Kumaraswamy piled on, branding it a "major blow to Bengaluru" and pinning the blame on the Congress government's "civic chaos"—flooded streets, water crises, and delayed clearances that reportedly scared off Google scouts.
For Google, the calculus was clear: Visakhapatnam offered scalability without the headaches. Bengaluru, once unbeatable, now contends with saturation—over 1,200 data centers straining its grid and talent amid 8-10% annual migration outflows. Experts like those at Nasscom warn that without reforms, Karnataka risks ceding ground to "Tier-2.5" hubs like Vizag, which blend affordability with ambition. "This isn't a zero-sum game, but incentives matter when every megawatt counts," noted a Deloitte analyst.
As construction kicks off next quarter, the project heralds a new chapter for India's AI race, projected to hit $17 billion by 2027. Yet, in the shadow of Vizag's rising servers, Bengaluru's tech titans are left recalibrating—proof that in the AI era, ports and promises can outpace pixels and prestige.
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