Gujarat has launched a new data centre policy aiming to attract ₹6 lakh crore in investment to create 7.5 GW of capacity by 2029. The policy provides long-term power subsidies, tax reimbursements, and land duty exemptions to attract global digital infrastructure players. Investors should monitor how these incentives impact the operating margins of technology and infrastructure companies setting up projects in the Dholera region.
The Gujarat government has introduced the 'Viksit Gujarat Data Center Policy 2026-2029,' targeting a massive ₹6 lakh crore investment to build 7.5 GW of data centre capacity. This move is designed to make the state a primary hub for digital infrastructure, specifically targeting AI, cloud computing, and high-performance computing needs that require massive power and connectivity.
Fiscal Incentives and Operational Benefits
To attract large-scale capital, the policy offers a deep basket of incentives. Eligible projects, particularly in the Dholera Special Investment Region, will receive a 2.5% capital subsidy over ten years. Furthermore, the state is providing an interest subsidy of up to 4% on term loans, with a cap of ₹25 crore per year.
Operational costs are a major concern for data centre operators due to high electricity consumption. The policy addresses this by offering a ₹1 per unit power tariff subsidy for twenty years and a full reimbursement of electricity duty for the same period. Additionally, companies will benefit from SGST reimbursements and full exemptions on stamp duty for land acquisition. These incentives are capped at 75% of the total fixed capital investment, distributed over two decades.
Infrastructure and Sustainability Requirements
The policy introduces a single-window clearance system via the Investor Facilitation Portal to reduce the time taken for project approvals. Beyond the financial package, the state is investing in digital connectivity by facilitating new cable landing stations to improve network speed and reduce data latency.
Sustainability is a mandatory component of this policy. To qualify for these incentives, developers must ensure that at least 51% of their power usage comes from renewable energy sources. The government is also providing financial aid for captive desalination plants to support water cooling requirements, which is a significant operating expense in large-scale data centres.
Investor Perspective and Monitoring
For investors, the success of this policy will depend on the actual execution of these projects and the state's ability to maintain a reliable, low-cost power supply for the next two decades. While the fiscal benefits are substantial, the requirement for 51% renewable energy sourcing may lead to higher initial capital spending for developers compared to projects in regions with lower green-energy requirements.
Investors should track the upcoming project announcements from major data centre operators and technology infrastructure firms in the Dholera region. The key monitorable will be the actual uptake of these incentives and whether the infrastructure, such as power connectivity and cable landing stations, keeps pace with the ambitious 7.5 GW capacity target. Given that data centre business models are highly sensitive to power costs and land availability, this policy is a critical development for companies planning to expand their digital footprint in Western India.