New Delhi, Sep 15 (KNN) The Indian government is considering far-reaching incentives to boost the data centre industry under its draft National Data Centre Policy.

If approved, developers may receive a tax holiday of up to 20 years, provided they meet specified benchmarks in capacity, energy efficiency, and job creation.

Another major benefit proposed is GST input tax credit on capital assets. This would apply to things such as construction materials, cooling systems, HVAC, and electrical equipment—items critical to data centre infrastructure.

To attract global players, companies that lease or operate at least 100 MW of capacity could qualify for “permanent establishment” status in India under the policy.

Meanwhile, firms that set up AI development hubs or global capability centres alongside their data facilities in the same city could receive special incentives.

Addressing two major bottlenecks—land and power—the draft policy proposes that states identify and reserve land near industrial corridors, IT hubs, or manufacturing clusters to build data centre parks.

To ensure reliable electricity supply, the IT ministry will collaborate with the Ministry of Power and other regulatory bodies.

Green energy will also be encouraged via uniform standards for energy storage, and possibly using small modular reactors for large data centre hubs.

This push comes as India’s data centre market is expanding rapidly: throughput has been increasing at about 24% per year since 2019.

Pathways for new capacity are strong—around 795 MW is expected to come online by 2027, bringing total projected capacity to about 1,825 MW. Occupancy is already high, around 75-80%, underscoring a growing demand.

(KNN Bureau)