White House trade advisor Peter Navarro has sparked controversy by questioning why Americans are funding artificial intelligence services in India. In a recent interview, Navarro expressed concerns over US companies like OpenAI operating on American soil while serving global clients, including those in India and China.
Navarro's Comments Amid Strained US-India Ties
Navarro made these remarks during an interview with former White House chief strategist Steve Bannon on 'Real America Voice.' He specifically pointed out that ChatGPT uses American electricity and infrastructure to service users worldwide. This criticism comes at a time when trade relations between Washington and New Delhi are under strain.
Earlier reports from The Indian Express revealed that US Trade Representative officials, during a visit to India, urged American tech companies to adopt an 'America First' strategy. They emphasized directing investments in technology and AI back to the US to create jobs domestically, rather than outsourcing them.
Focus on AI Infrastructure and Energy Demands
In meetings with American tech firms, USTR officials highlighted the importance of prioritizing AI infrastructure investments in the US. They discussed how companies should focus on capital expenditure in hardware and energy within American markets. This aligns with broader questions about the high energy consumption required to power AI services globally.
Data centers, essential for AI operations, have massive energy needs. According to the International Energy Agency, data center power usage could double by 2026. This surge makes it challenging for companies to achieve net-zero or carbon-negative goals by 2030. As a result, major players like Google and Microsoft are turning to nuclear power plants to secure energy for their data centers.
India's Data Center Boom and Energy Strategies
India is actively exploring nuclear energy to support its growing data center industry. The IT Ministry is encouraging the use of small modular reactors for reliable and carbon-free power. This move mirrors trends in countries like the US, where nuclear deals are becoming common.
Power consumption is a critical factor for data centers, with 40% of capital expenditure going towards electrical systems and 65% of operating costs attributed to electricity. Setting up one megawatt of data center capacity in India costs between Rs 60 to 70 crore.
Despite investments from companies like Google, concerns remain about India's ability to manage energy, land, and water resources. According to Anarock, India's data center market is valued at $10 billion, with $1.2 billion in revenue generated in FY24. JLL predicts that India will add 795 MW of new capacity by 2027, bringing the total to 1.8 GW.
Navarro's comments underscore ongoing tensions in US-India trade relations, while highlighting the global challenges of energy sustainability in the AI era.
