The Chief Minister of Gujarat, Bhupendra Patel, has announced the Viksit Gujarat Data Center Policy 2026-2029 in a bid to make the state a premier destination for operators looking to establish data centers in the country. The policy is dubbed the first-of-its-kind in India and aims to build an ecosystem of green AI hyperscale data centers in the state.
According to a press release issued by the Chief Minister’s Office, the policy was prepared by the Department of Science and Technology in line with provisions of the Union Budget that include a 20-year tax holiday for global data center infrastructure providers. This, together with other provisions of the policy, is intended to accelerate cloud services, AI, digital transactions, e-commerce, smart manufacturing, and digital governance in Gujarat.
“This first-of-its-kind dedicated policy is a landmark milestone aiming at making Gujarat a global hub for cloud, AI, and world-class data infrastructure,” Patel said in a statement. “Our unique value proposition lies in a comprehensive ecosystem that integrates high-speed connectivity, skilled talent, and our national leadership in renewable energy.”
Gujarat is well suited for data center operators due to its abundant green energy sources and coastline. Importantly, the policy outlines that 51 percent of energy used by data centers in the region must come from green sources. In regards to water, this must be acquired from desalination plants that developers will have to build themselves per a report from Outlook Business.
This policy is also expected to generate substantial investment across the rest of the state. According to the Chief Secretary of Gujarat, Manoj Kumar Das, the policy is expected to attract investments worth Rs 6 trillion (US$ 62.9 billion) to the state.
Gujarat’s Science and Technology Minister, Arjun Modhwadia, said that the state is set to become the hub of the AI ecosystem over the next 10 years as a result of this policy. The minister noted that India’s current data center capacity sits in the region of 2 to 3 GW and even with upcoming projects in mind, this would only reach 5 GW. He added that the state has received proposals for data centers that would push capacity to 10 GW with the state itself planning to develop up to 8 GW of capacity.
This policy arrives as Indian states compete for data center capacity. States are authoring policies in a bid to attract hyperscale and AI data center operators, and while competition is heating up, this is good news for the wider economy.
Led by a surge in demand for hyperscale and colocation services, the Indian data center market is expected to attract investments totalling US$ 21.03 billion by 2031. The states of Telangana, West Bengal, and Gujarat are emerging as destinations of choice for operators according to a report from Arizton.