The Indian data centre industry has em­erged as one of the fastest growing se­gments in the country, attracting con­siderable investments. The industry has re­ceived a major fillip post the Covid-19 pandemic. This, coupled with the roll-out of 5G, ever-rising digital usage, cloud consumption and real-time applications tri­ggering edge data centres, will usher in high growth over the next few years.

In the Union Budget 2022-23, the fi­nance minister accorded infrastructure status to data centres. This move is aimed at helping companies in availing easier cre­dit and managing resources as the industry seeks to expand outside top cloud regions. Further, various state governments have also come up with their own data centre policies to leverage emerging opportunities in the space. These policies lay down various guidelines governing data centre infrastructure in the respective states.

A look at key policy initiatives taken by states…


Karnataka has notified its data centre policy, along with a slew of attractive incentives and concessions for investment in these un­its, as the government aims to attract about Rs 100 billion in the data centre sector over the next five years. Moreover, the cabinet has granted Rs 1 billion to implement the Karnataka Data Centre Policy, 2022. The aforesaid policy aims at developing more than a 200 MW capacity data centre industry in Karnataka by 2025.

Further, the policy offers special in­ce­ntives for companies to set up data storage infrastructure outside Bengaluru, a capital subsidy of up to Rs 100 million, 10 per cent land subsidy up to Rs 30 million, 100 per cent stamp duty exemption up to 10 acres, a concession on registration ch­ar­ges and 100 per cent exemption on land conversion fees. Standard operating pro­ce­dures applicable across Karnataka inclu­de power tariff concession, exemption from electricity duty and other special in­cen­tive packages on a case-to-case basis.

Tamil Nadu

Tamil Nadu has launched its Data Centre Policy 2021. Through the policy, the state aims to encourage and support the operations of data centres, especially those that utilise renewable energy for their projects.

The state has made a provision for the purchase of power from Tamil Nadu Ge­ne­ration and Distribution Corporation Limited at the prevailing industrial tariff ra­tes as per the governing Tamil Nadu El­e­ctricity Regulatory Commission regulations. In addition, data centre facili­ties/ parks shall be eligible for 100 per cent subsidy on electricity tax for power purchased from Tamil Nadu Generation and Distri­bution Corporation Limited or generated and co­nsumed from captive sources for five years from the date of commencement of commercial operation. As per the latest tariff order, this charge is 50 per cent of the conventional charges for data centre un­its. Incentivising further, the governme­nt has provisioned that data centre units or parks with a sanctioned load of 50 MW or more shall be provided with dual power (two different grids from two different locations/providers).

In addition to financial incentives, the government offers some non-financial initiatives as well, mainly in the form of con­ce­ssions on stamp duty/registration fee paid on sale/lease/transfer of land for data centres and parks. The state also allows data centres/parks to avail a 50 per cent subsidy on the land cost from Electronics Corporation of Tamil Nadu Limited/Sta­te Industries Promotion Corporation of Ta­mil Nadu Limited/Tamil Nadu Sm­all In­d­ustries Development Corpora­tion Li­mi­ted in Category C districts.

Uttar Pradesh

Recently, Uttar Pradesh launched its Data Centre Policy, 2021 with an aim to build a conducive policy en­vironment for the data centre industry. Under the policy, the state aims at developing a 250 MW data centre industry, attract investments worth Rs 200 billion and establish at least three state-of-the-art private data centre parks.

The policy outlines various financial as well as non-financial incentives to attract in­vestment in the data centre spa­ce. As per the state policy, data centre uni­ts shall be eligible to get 7 per cent capital subsidy up to Rs 200 million on fixed capital investment excluding land and building. The same shall be disbursed within 10 years, with an annual ceiling of Rs 20 million. With regard to land subsidy for data centre units/parks, the state government has provisioned 25 per cent land sub­sidy on prevailing sector rates to be pro­vided on purchase/lease of land fr­om state agencies in the Madhyanchal and Paschimanchal regions. Besides, 50 per cent land subsidy will be allowed on prevailing sector rates on purchase/lease of land from state agencies in the Bundel­kh­and and Purvanchal regions.

Meanwhile, 100 per cent exemption of stamp duty on the first transaction (auth­ority/landowner to data centre unit) and 50 per cent on the second tran-saction (data centre parks to data centre units) shall be available for pur­chase/lease of land by data centre units. A 100 per cent exemption on electricity duty for a period of 10 years post the commencement of commercial operation has been provided by the state government and dual grid po­w­er supply shall be made available on demand, at applicable charges. Additio­na­lly, the state government will ensure uninterrupted water supply to data centre un­its, both inside and outside the data centre park, for units in the area of the Industrial Area Develop­ment Authority.


Telangana had, in 2016, launched its Information and Communications Tech­no­logy Policy, wherein the state recognised a data centre as an integral requirement of these firms. To this end, the policy has laid down various guidelines with respect to data centre units and incentives provided by the state government. Given the power-heavy nature of data centres and the power deficiency situation that exists across the country, the Telan­gana go­vernment shall establish dual po­wer grid networks to ensure uninterrupted qu­a­lity of electricity supply.

Further, the state has permitted data centres to avail of renewable energy under an open access system from within the state, after paying the cost component to distribution companies (discoms) as fixed by the electricity regulatory commission (subject to a maximum of one-third of their total power requirements). Given the significant consumption of fuel by backup power sources such as generator sets, the government shall provide fuel at a price lower than the market rates to eligible players in data centre campuses.

Andhra Pradesh

As far as policy thrust for data centres is concerned, Andhra Pradesh has provisions for private sector participation in the An­dhra Pradesh Information Technology Policy, 2021-2024. Significantly big players are eligible through a special route for incentives on land, power and taxes. As a special package, the state go­v­ernment provides incentives for land at concessional rates, assured power supply, water at competitive prices and external infrastructure support. The state government is also offering special packages for start-up companies in terms of technology and assistance for end-to-end set-ups such as workspaces (including work-from-home incentives). Recently, in November 2021, the Andhra Pradesh government has allotted 130 acres of land to Adani Enterprises for setting up a data centre park in Ma­d­hu­rawada, Visakhapatnam. The allotted land will witness an investment of around Rs 146.34 billion and will have a 200 MV data centre park, a business park, a skill uni­versity and a recreation centre.

West Bengal

With a vision of building a world-class data centre ecosystem in West Ben­gal by at­tra­cting foreign and domestic in­vest­ments, the state launched its Data Centre Policy, 2021. The policy envisions developing a 400 MW data centre industry in the state by 2025 and aims to attract an investment of around Rs 200 billion to support this growth. As an incentive, the state provides 100 per cent ex­em­ption of stamp duty and registration fees for any transaction related to setting up data centre(s) in the state. The state also provides a waiver of electricity duty on the actual electricity consumption for a period of five years. Moreover, the government en­sures establishment of a dual power grid network to ensure uninterrupted electricity supply. Besides, the state off­ers uninterrupted and high speed water supply to data centre(s).


Given the massive surge in data consumption that is taking place, the Indian data centre industry is expected to grow exponentially. According to CRISIL, the In­dian data centre industry is expected to re­co­rd a rapid 25-30 per cent compound annual growth rate to reach $4.5 billion-$5 billion by fiscal year 2025.

Owing to this growing potential, different states are eager to leverage opportunities in the data centre space as operators and infrastructure investors are increasingly pursuing expansion plans in India. To this end, a number of players are adopting the acquisition route to enter the Indian market. Together, these state policies and reforms are expected to transform India into a global data centre hub while providing the necessary impetus to investment growth.