India is quietly — and quickly — trying to become a global hub for data centres. The Ministry of Electronics & IT (MeitY) has restarted consultations on a long-planned National Data Centre Policy and the draft proposals now on the table include big incentives designed to accelerate capacity, local manufacturing and energy efficiency.
Why the push? Rapid growth in cloud adoption, AI workloads, streaming, fintech transactions, 5G rollouts and stronger data-localisation rules have created a surge in demand for local compute and storage. Regulators and companies alike want data kept and processed in India — and that demand, combined with opportunities from generative AI, is the immediate trigger for the policy sprint.
What’s new in the policy:
- Tax & incentive bonanza (draft): The 2025 draft National Data Centre Policy reportedly proposes long-term tax incentives — including conditional tax holidays for up to 20 years — plus GST input credits and infrastructure support to make data-centre investment more attractive. These benefits are likely to be tied to performance metrics such as capacity addition, energy efficiency and job creation.
- Single-window clearances & streamlined approvals: MeitY wants one-stop permissions to remove red tape and speed up construction and commissioning.
- Focus on green power & efficiency: The policy links incentives to power-use effectiveness (PUE) and renewable energy sourcing — reflecting how energy-intensive hyperscale sites must be sustainable to qualify.
Industry forecasts point to explosive growth: credit agency ICRA projects third-party data-centre capacity in India to double from about 1,250 MW in March 2025 to roughly 2,500 MW by March 2028, driven by nearly ₹90,000 crore of investment. That’s a clear signal of both demand and how much capacity the policy aims to unlock.
The idea isn’t brand new — India has funded state data centres under earlier e-governance initiatives and has long debated a national policy since the late 2010s. What’s different now is the confluence of AI, streaming, payments and stricter data rules that make a coordinated national push urgent.
Global tech giants like Amazon, Google, Microsoft, and investment firms like Carlyle Group are heavily investing in the Indian data center business — Reuters reported Google’s plan for a $6 billion data-centre+renewables investment in southern India, illustrating how international capital is flowing in alongside domestic players.
Bottom line: If implemented, India’s National Data Centre Policy could fast-track investments, create jobs, and anchor AI and cloud infrastructure locally — but industry watchers say clarity, speed and long-term policy stability will be as important as short-term tax breaks.
