Potential for Sikkim as an AI Data Centre Hub

ASWIN NIROLA

The new year of 2026 started off with wonderful news in the chapter of tech startups in Sikkim. Sikkim-based AI startup Apuphi raised German Foreign Direct Investment (FDI) at a valuation of $4.4 million. This was remarkable in various dimensions for the startup ecosystem in Sikkim, which is at a budding stage. This is a signal to both investors and budding entrepreneurs that startups need not originate from the metropolitan cities like Bangalore, Delhi or Mumbai but from the Himalayan States as well.

The Age of AI

AI is becoming a core part of our lives, just like the internet two decades ago. Due to the availability of smart gadgets and high-speed internet, the adoption of AI has been unprecedented, with the majority of Indians now using AI chat platforms in their daily lives. From individuals using AI for coding to startups using AI as intelligent agents, the use cases are plenty. AI may also be the cause for the decrease in entry level jobs in the tech industry at present, but in the long run, it has the potential to create way more jobs than it takes. We are witnessing creative destruction in action where one technological innovation destroys the old ones, like decreasing entry level roles like basic data entry, customer service calls, junior developer roles which are being automated or “destroyed” and are being replaced by high-value “creative” roles such as product manager with product taste, system architect with a vision beyond the AI's context window, UI-UX designer with emotional intelligence and other such roles where AI seems to hit a glass ceiling. This idea of creative destruction was the key theme of the Nobel Prize in Economics of 2025.

AI is also opening opportunities for people from a non-technical domain with basic coding knowledge to create compelling products. A case in point is Casetext, founded by Jake Heller. Although he was previously a lawyer working for a law firm, he had a background in coding from his childhood. Using his professional knowledge of law and combining it with his coding skills and leveraging AI, he was able to get a massive $650 million cash exit for his company. And it's not just law, all fields of Engineering, Medicine and even Social Science are being revolutionised by AI.

Sikkim and AI

Now, let us see where our small but beautiful state comes into play in this AI revolution. AI runs on GPUs that use parallel processing, which is essentially doing billions of matrix multiplications per second. This requires a lot of energy and generates a larger amount of heat. Sikkim has several hydropower projects which can provide the required energy to run the AI data centres. Energy is one part of the equation, and the other, even more important aspect is cooling. The energy consumption for cooling the AI servers takes 30% to 50% of a data centre’s power requirement. Global demand for cooling is expected to triple by 2030. Sikkim, being at a higher altitude as compared to the rest of India, already has a cooler climate. In addition to power consumption, the cooling process also requires a large amount of water, and even that is plentiful in Sikkim, as its rivers are fed by glacial waters and huge amounts of rainfall every year.

Jio is building India’s largest AI-ready data centre in Jamnagar with the goal of making AI affordable and accessible to every Indian. Adhani Group also plans data centres in India in locations such as Andhra Pradesh, Maharashtra, Gujarat and Tamil Nadu with $10 billion-plus (Rs. 90 thousand crore-plus) investments. This investment signals a huge demand for such data centres, but one of the biggest criticisms of these projects is that they can cause a huge shortage of water in those places which are already facing a water crisis.

Let’s take an example of a Hyper Scale AI Data Centre of 100 MW. The most energy efficient cooling technique is evaporation cooling, but this can consume 1.5 million litres of water per day. For the places mentioned above, this can be significant, but for our river Teesta, it takes just 1-2 seconds during peak discharge to reach the daily water requirement. Less than 1% of all our river’s discharge can meet the water requirement for even a Gigawatt Scale AI Data Centre. This is a huge potential and can unlock a huge source of revenue for the State. No wonder companies like Google, Microsoft and Amazon are racing to build AI data centres in places like Sweden, which have ample hydroelectric energy.

Building the Virtuous Cycle

Many Sikkimese currently venture to Bangalore, Delhi, or abroad to work in tech. This mirrors the history of California, which once lost its brightest minds to the East Coast. One man, Frederick Terman (the Dean of Engineering at Stanford), changed this by encouraging students like Hewlett and Packard (founders of HP) to start businesses locally and by creating the Stanford Industrial Park by leasing Stanford land at affordable rates to private tech companies. This created a physical hub where academia and industry lived side-by-side, laying the foundation for Silicon Valley.

By establishing AI data centres in Sikkim, we can create a similar ecosystem. The presence of such infrastructure creates a virtuous cycle of innovation and research. We have already seen that AI costs are dropping 10x every year, and some consumer machines can now run small language models. With localised AI data centres, Sikkim could become a hub for AI research.

We don’t have to position ourselves as the state with the biggest AI capacity. We can play to our strengths and create a model of sustainable AI infrastructure which can run state of the art models without causing groundwater depletion or wasting too much power in cooling. Our story could be that of a state with AI infrastructure that is rooted in climate resilience by leveraging the advantages that Sikkim possesses. Like, you could have ice hockey in Dubai, but it would be a highly inefficient setup. Gnathang is a much better location for that. Similarly, since energy and cooling are the core of AI Infrastructure, it only makes sense that such infrastructure be established in Sikkim. The potential is huge, and if we ourselves don’t realise it, then someone else will and reap all the benefits.

(ult.sofis@gmail.com)