Why is Gujarat betting ₹6 lakh crore on data centres? | Explained

Published 10 July 2026 · politics

The story so far: When the Gujarat Government unveiled its first-ever Data Centre Policy (2026-2029), it did more than announce a new industrial policy but

The story so far: When the Gujarat Government unveiled its first-ever Data Centre Policy (2026-2029), it did more than announce a new industrial policy but signalled its ambition to enter one of the fastest-growing segments of the global digital economy by becoming the first State in India to bring a policy. The State hopes to attract investments worth ₹6 lakh crore and build 7.5 GW of data centre capacity over the next few years, positioning itself alongside established hubs such as Maharashtra, Tamil Nadu and Telangana. It also shows a larger trend unfolding across the country: that States are no longer competing only for factories, IT companies, ports or automobile plants. They are now competing to host the digital infrastructure that powers everything from artificial intelligence (AI) to online banking. The policy, launched by Chief Minister Bhupendra Patel, offers a wide range of fiscal and non-fiscal incentives, including capital subsidy, interest subsidy, power tariff support, reimbursement of State GST (SGST), exemption from stamp duty and registration charges, and financial assistance for captive desalination plants to meet the sector’s high water requirements. The government said the policy has been designed to capitalise on the rapid growth of AI, cloud computing, digital payments, e-commerce, electronics manufacturing and other data-intensive sectors, while strengthening Gujarat’s position in India’s digital economy. What exactly is a data centre? A data centre is, in simple terms, the physical home of the internet. It is a highly secure building filled with thousands of servers, networking equipment and storage systems that process, store and transmit digital information. Every online activity, such as sending a WhatsApp message, making a UPI payment, streaming a film on Netflix, storing photographs on Google Drive, shopping on Amazon or interacting with an AI, depends on data travelling through these facilities. Unlike the office server rooms, modern data centres are massive industrial-scale facilities designed to operate around the clock with virtually no interruption.

They require continuous electricity, high-speed fibre connectivity, sophisticated cooling systems and multiple layers of backup infrastructure to ensure that services remain available every second of the day. Why do they need a policy? State Chief Secretary M.K. Das claimed that Gujarat became the first state to bring this policy. However, at least 15-16 States, such as Telangana, Andhra Pradesh and West Bengal, now have their own dedicated data centre policy (or an IT/ITES policy that specifically covers data centres). A dedicated policy gives certainty to investors on issues like guaranteeing uninterrupted electricity for decades, providing reliable water supplies, ensuring multiple high-speed fibre routes, offering quick regulatory approvals and making land available for future expansion while also spelling out financial incentives that reduce the cost of establishing large facilities and attract more investors. They are not like other heavy industries, which are only looking for land and tax concessions. Why is Gujarat interested? Science and Technology Secretary P. Bharati said that while India generates nearly 20% of the world’s data, it accounts for only about 3% of global data centre capacity, while the United States and China together hold about 70 per cent of worldwide capacity. For Gujarat, the policy fits into a broader strategy of expanding beyond its traditional strengths in manufacturing, ports and petrochemicals. The State already has one of India’s strongest renewable energy sectors, particularly in solar and wind power, alongside industrial hubs such as Dholera and GIFT City. Since electricity accounts for a substantial share of a data centre’s operating costs, access to renewable power has become an important attraction for global technology companies seeking to reduce their carbon footprint. The State also offers extensive industrial land, a relatively reliable transmission network, major ports, and a well-developed logistics ecosystem and wants to create more employment.