Key Points
- India's data centre capacity has grown from 375 MW in 2020 to 1.57 GW as of August 2026
- Investments of USD 70 billion underway with additional USD 90 billion in announced projects
- Union Budget 2026-27 introduced tax holiday for foreign cloud providers until 2047
India’s installed data centre power capacity has grown more than fourfold from 375 MW in 2020 to 1.57 GW as of August 2026, with projections indicating the sector will reach nearly 8 GW by 2030, according to government data released on 14 September.
The rapid expansion shows rising demand for computing infrastructure to support banking, e-governance, digital payments and cloud computing services. Investments of nearly $70 billion are already underway in the sector, with an additional $90 billion in announced projects, the government stated.
A data centre is a secure facility that houses computing, storage and networking equipment. It stores, processes and distributes large volumes of digital information, enabling services that operate continuously around the clock.
Data centre Policy framework
The Centre has strengthened the data centre ecosystem through targeted policy and fiscal measures over the past four years. In the Union Budget 2022-23, data centres were included in the Harmonised List of Infrastructure, granting them status equivalent to national highways, airports and power grids. This designation facilitates access to long-term credit at lower interest rates.
The Union Budget 2026-27 introduced a tax holiday for eligible foreign cloud service providers operating through India-based data centre infrastructure. The incentive covers tax years 2026-27 to 2046-47 for notified foreign companies.
The National Informatics Centre (NIC) has established state-of-the-art National Data Centres across the country, including facilities at NIC Headquarters in Delhi, Pune, Hyderabad and Bhubaneswar. NIC has also established 37 smaller data centres at various state capitals, providing digital services to government institutions at different levels.
Supporting programmes
Several linked schemes are driving data centre demand. The Union Cabinet approved the second phase of the Semicon India Programme on 15 July 2026 with an outlay of Rs 1,27,500 crore under the India Semiconductor Mission (ISM). The programme aims to build a domestic semiconductor ecosystem that would supply components to data centre infrastructure.
The IndiaAI Mission was approved with a total budget outlay of Rs 10,371.92 crore to build a comprehensive artificial intelligence ecosystem. AI applications require significant computing capacity, making the mission a key driver of data centre growth.
The Electronics Components Manufacturing Scheme (ECMS) allocation increased from Rs 22,000 crore to Rs 40,000 crore. The government also launched PLI Scheme 2.0 for IT Hardware to create a domestic manufacturing ecosystem for servers and related equipment.
According to the Central Electricity Authority (CEA), power demand from data centres could reach 17 GW by 2031-32. The government is promoting renewable energy through the Green Energy Open Access Rules, Green Energy Corridor Scheme and National Green Hydrogen Mission to ensure cleaner power sources for the sector.
By the numbers
Key figures from this story- 1.57 GW
- Current data centre power capacity as of August 2026
- $160 Billion
- Total investments underway or announced
- 8 GW
- Projected capacity target by 2030
The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act supports reliable nuclear power for emerging sectors including AI and data centres. The framework enables future deployment of small modular reactors and micro nuclear reactors.
The Bureau of Indian Standards (BIS) has developed standards for data centre efficiency through its technical committee LITD 31. Published standards cover Power Usage Effectiveness (PUE), which measures how efficiently a facility uses electricity; Carbon Usage Effectiveness (CUE), which tracks carbon emissions per unit of electricity consumed; and Water Usage Effectiveness (WUE), which measures water consumption efficiency.
The Bureau of Energy Efficiency (BEE) has notified the Energy Conservation and Sustainable Building Code (ECSBC) 2024, prescribing energy efficiency and water conservation norms relevant to data centre infrastructure.
Your Questions, Answered
What is India's current data centre power capacity?
India's installed data centre power capacity stood at 1.57 GW as of August 2026, up from 375 MW in 2020. The government projects this will reach nearly 8 GW by 2030.
What incentives has the government provided for data centres?
Data centres received infrastructure status in the Union Budget 2022-23, enabling access to long-term credit. The Union Budget 2026-27 introduced a tax holiday for eligible foreign cloud providers until 2047.
How much investment is flowing into India's data centre sector?
According to government data, investments of nearly USD 70 billion are underway in India's data centre sector, with an additional USD 90 billion in announced projects.
What is driving data centre demand in India?
Rising demand comes from banking, e-governance, digital payments, cloud computing and AI applications. The IndiaAI Mission and growing digital services are key drivers of data centre growth.
