India's Data Centre Infrastructure Growth and Policy Framework
India's digital economy is experiencing rapid growth, driving unprecedented demand for computing capacity, data storage, and high-speed connectivity. Data centres serve as the critical foundation powering digital services including online banking, e-Governance, digital payments, and cloud computing. These facilities integrate computing, networking, power, cooling, security, and management systems to maintain reliable operations and data security.
Capacity Expansion and Investment Trends
India's installed data centre power capacity has shown remarkable growth, increasing from approximately 375 MW in 2020 to 1.57 GW as of August 2026. The capacity is projected to expand further to nearly 8 GW by 2030. Current investments total approximately USD 160 billion, comprising USD 70 billion in underway projects and an additional USD 90 billion in announced projects, reflecting strong investor confidence in the sector.
Government Policy Support and Incentives
The Government has implemented significant policy measures to strengthen the data centre ecosystem. In the Union Budget 2022-23, data centres were included in the Harmonized List of Infrastructure, granting them infrastructure status that facilitates greater access to credit. The Union Budget 2026-27 introduced a tax holiday for eligible foreign cloud service providers using India-based data centre infrastructure, covering Tax Years 2026-27 to 2046-47 for notified foreign companies.
Supporting Ecosystem Schemes
Multiple linked schemes support data centre growth, including the second phase of the Semicon India Programme approved by the Union Cabinet on July 15, 2026, with an outlay of ₹1,27,500 crore under the India Semiconductor Mission. The IndiaAI Mission was approved with a total budget outlay of ₹10,371.92 crore to build a comprehensive AI ecosystem. The Electronics Components Manufacturing Scheme allocation increased from ₹22,000 crore to ₹40,000 crore, and PLI Scheme 2.0 for IT Hardware aims to create a robust domestic manufacturing ecosystem for servers and other IT hardware.
Infrastructure and Operational Details
The National Informatics Centre has established state-of-the-art National Data Centres at its Headquarters in Delhi, Pune, Hyderabad, and Bhubaneswar, plus 37 smaller Data Centres at various State Capitals. These facilities support round-the-clock operations for government institutions with skilled onsite personnel. Data centres require uninterrupted power operations supported by Uninterruptible Power Supplies, backup generators, and advanced cooling systems including Heating, Ventilation and Air Conditioning systems, with emerging technologies like direct-to-chip liquid cooling, adiabatic cooling, and immersion cooling.
Sustainability and Efficiency Standards
With projected energy demand reaching 17 GW by 2031-32 according to the Central Electricity Authority, the Government is promoting cleaner energy through initiatives including Green Energy Open Access Rules, Green Energy Corridor Scheme, National Green Hydrogen Mission, National Programme on High Efficiency Solar PV Modules, and Solar Park Scheme. The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act supports reliable nuclear power for emerging sectors including AI and data centres.
The Bureau of Indian Standards technical committee LITD 31 has developed standards covering Power Usage Effectiveness (PUE), Carbon Usage Effectiveness (CUE), Cooling Efficiency Ratio (CER), and Water Usage Effectiveness (WUE). The Bureau of Energy Efficiency has notified the Energy Conservation Building Code (ECBC) 2017 and the Energy Conservation and Sustainable Building Code (ECSBC) 2024, which prescribe energy-efficiency and water-conservation norms for buildings including data centre infrastructure. Groundwater extraction for industrial purposes is regulated under guidelines issued by the Ministry of Jal Shakti.
Future Outlook
Data centre growth is increasingly important for data sovereignty, digital trust, economic competitiveness, and technological self-reliance. The expansion of cloud and Artificial Intelligence infrastructure creates new opportunities for innovation and economic growth, requiring responsible governance of data, technology, energy, and digital infrastructure with strong standards, robust cybersecurity, and efficient resource management.