Gujarat Launches the Viksit Data Centre Policy 2026-29 on 9 July
Chief Minister Bhupendra Patel and Deputy Chief Minister Harsh Sanghavi announced the Viksit Gujarat Data Centre Policy 2026-29 in Gandhinagar on 9 July 2026, setting out a three-year framework to attract investment in hyperscale data centres, AI compute infrastructure, and digital services across the state. The policy targets attracting approximately Rs 6 lakh crore in investments and enabling the development of 7.5 to 8 gigawatts of data centre capacity by 2029. Gujarat had already received informal proposals for approximately 10 gigawatts of data centre capacity from domestic and international operators before the formal policy was announced — evidence that investor demand significantly exceeds what the previous regulatory environment could efficiently channel into committed projects.
India's Data Centre Gap: 20 Per Cent of the World's Data, 3 Per Cent of the Capacity
The commercial and policy rationale for the Gujarat framework rests on a specific structural imbalance. India currently generates approximately 20 per cent of the world's data — driven by close to a billion active internet users, the world's highest volume of digital payment transactions through UPI, a rapidly digitising enterprise economy, and accelerating AI workloads across financial services, healthcare, and logistics. However, India accounts for only around 3 per cent of global data centre capacity.
This 20-to-3 mismatch means Indian data workloads are processed and stored disproportionately in Singapore, Frankfurt, Tokyo, and US-West cloud regions, adding latency for Indian end users, creating data sovereignty concerns for regulated industries, and exporting economic value to overseas infrastructure operators. The IndiaAI Mission's Rs 10,000-crore shared compute programme and the private GPU cloud investments accompanying it are further constrained by this gap: AI compute infrastructure requires data centre power, cooling, and connectivity at scale that India's current capacity cannot fully support.
The Incentive Framework
The Viksit Gujarat Data Centre Policy 2026-29 offers a layered incentive structure covering the primary capital and operating cost components of data centre investment. Capital expenditure support includes a 2.5 per cent capital subsidy for eligible projects in the Dholera Special Investment Region and reimbursement of stamp duty on land acquisition. Operating cost support includes an interest subsidy of up to 4 per cent for 10 years, a power tariff subsidy of Rs 1 per unit for 20 years, State Goods and Services Tax reimbursement during the construction phase, electricity duty reimbursements during operations, and assistance for desalination plant development.
Power is typically the largest operating cost for a data centre, accounting for 40 to 60 per cent of total operating expenditure. The Rs 1-per-unit power tariff subsidy over 20 years represents a substantial reduction in the total cost of ownership for a hyperscale facility, and makes Gujarat's tariff-adjusted power costs competitive with mature data centre markets in Singapore and Malaysia.
The Dholera Advantage
The Dholera Special Investment Region, a greenfield smart city development south of Ahmedabad, is the primary target location under the policy and the site attracting the most favourable capital subsidy. Dholera has dedicated industrial land already zoned and serviced, high-capacity power substations under the Delhi-Mumbai Industrial Corridor programme, and fibre connectivity through Gujarat's expanding broadband infrastructure. The 2.5 per cent capital subsidy for Dholera projects is designed to make the region the default anchor location for new hyperscale investment in India alongside the established Mumbai and Chennai corridors.
The 51 Per Cent Green Energy Mandate
The policy requires that 51 per cent of the electricity consumed by data centres operating under the framework must come from renewable energy sources. It also mandates that data centre water requirements must be met through desalination plants rather than from water supplies reserved for agriculture or industry — a requirement that reflects Gujarat's coastal geography and the significant cooling water demands of high-density AI compute infrastructure.
The renewable energy mandate aligns the policy with the environmental commitments that hyperscale cloud providers have made publicly. Microsoft Azure, Google Cloud, and Amazon Web Services have all committed to operating on carbon-free or renewable power, and facilities that meet the 51 per cent renewable threshold can be integrated into these providers' green cloud certification frameworks — making the Gujarat policy commercially compatible with what the most significant potential investors already require from their global data centre portfolio.
What the Policy Means for India's Software and AI Ecosystem
Expanded domestic data centre capacity has three direct implications for India-based software companies, AI startups, and enterprise technology teams. Workloads currently routing through Singapore or US-West cloud regions due to India capacity constraints can migrate to lower-latency domestic regions, improving end-user response times for Indian applications. Regulated businesses in banking, insurance, and healthcare facing RBI or SEBI data localisation requirements will have more hyperscale capacity at competitive pricing, expanding the set of architectures that are both compliant and commercially viable. AI model training, fine-tuning, and inference — currently constrained by India's GPU compute availability — benefit directly from more domestic power and cooling capacity, since data centre infrastructure is the physical prerequisite for scaling AI compute deployment in-country.
For software development companies building for Indian enterprise clients, the Gujarat policy also signals the direction of procurement: large enterprise buyers are increasingly requiring cloud vendors to guarantee in-country data residency, and Gujarat's hyperscale capacity expansion makes that guarantee more credible and affordable.
The Bottom Line
Gujarat unveiled the Viksit Data Centre Policy 2026-29 on 9 July 2026, with Chief Minister Bhupendra Patel targeting Rs 6 lakh crore in investments and 7.5 to 8 gigawatts of data centre capacity under the three-year framework. The state had already received proposals for approximately 10 GW before the policy was formalised. Key fiscal incentives include a 2.5 per cent capital subsidy for Dholera projects, an interest subsidy of up to 4 per cent for 10 years, and a power tariff subsidy of Rs 1 per unit for 20 years. The policy mandates 51 per cent renewable power and water from desalination rather than from agriculture or industrial supply. The framework directly addresses India's structural data centre gap — India generates approximately 20 per cent of the world's data but hosts only around 3 per cent of global data centre capacity — and provides the regulatory and fiscal clarity needed to convert India's large pipeline of data centre investor interest into operational hyperscale facilities.
Frequently Asked Questions
What is the Viksit Gujarat Data Centre Policy 2026-29 and when was it launched?+
The Viksit Gujarat Data Centre Policy 2026-29 was announced by Chief Minister Bhupendra Patel and Deputy Chief Minister Harsh Sanghavi in Gandhinagar on 9 July 2026. The policy aims to attract investment in hyperscale data centres, AI infrastructure, and digital services, with the goal of making Gujarat the leading data centre hub in India. It targets approximately Rs 6 lakh crore in investments and the development of 7.5 to 8 gigawatts of data centre capacity by 2029. Gujarat had already received proposals for approximately 10 GW of capacity from domestic and international operators before the formal policy was announced, indicating substantial pent-up investor demand.
What fiscal incentives does the Gujarat Data Centre Policy 2026-29 offer?+
The Viksit Gujarat Data Centre Policy 2026-29 offers a layered set of fiscal incentives. These include a 2.5 per cent capital subsidy for eligible projects in the Dholera Special Investment Region, an interest subsidy of up to 4 per cent for 10 years, a power tariff subsidy of Rs 1 per unit for 20 years, SGST reimbursement during the construction phase, electricity duty reimbursements during operations, stamp duty exemptions on land acquisition, and assistance for desalination plant development. The 20-year power tariff subsidy is particularly significant, as power accounts for 40 to 60 per cent of a data centre's total operating expenditure and a subsidised tariff materially reduces the cost of ownership over the facility's lifetime.
How does Gujarat's policy address India's data centre capacity gap?+
India generates approximately 20 per cent of the world's data — driven by nearly a billion internet users, a massive digital payments ecosystem, and growing AI workloads — but accounts for only around 3 per cent of global data centre capacity. This means Indian data is disproportionately processed in Singapore, Frankfurt, and US-West cloud regions, adding latency, creating data sovereignty concerns, and shifting economic value overseas. Gujarat's policy targets 7.5 to 8 GW of new data centre capacity through hyperscale investment, with the Dholera Special Investment Region as the anchor location. The 51 per cent renewable energy mandate and the 20-year power tariff subsidy make Gujarat's infrastructure commercially attractive to the major cloud providers whose investments are needed to close this gap.
What does Gujarat's data centre expansion mean for India's software and AI companies?+
Expanded domestic data centre capacity benefits India-based software companies, AI startups, and enterprise technology teams in three ways. First, workloads currently routing through overseas cloud regions due to capacity constraints can migrate to lower-latency India regions. Second, regulated businesses in banking, insurance, and healthcare facing RBI or SEBI data localisation requirements will have more hyperscale options at competitive pricing. Third, AI model training, fine-tuning, and inference benefit directly from more in-country power and cooling infrastructure, since data centre capacity is the physical prerequisite for scaling AI compute deployment in India. Gujarat's policy also supports enterprise buyers who increasingly require cloud vendors to guarantee in-country data residency for sensitive workloads.
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TechPillow Team
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