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Gujarat has unveiled a comprehensive policy framework designed to transform the state into India's premier data center destination, offering unprecedented fiscal incentives including power tariff subsidies, capital grants, and tax exemptions worth up to 75% of eligible investments. The policy targets 7.5 GW of aggregate data center capacity with enhanced operational support and mandates renewable energy integration, positioning Gujarat to compete with global data center hubs.
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On July 9, 2026, the State Government of Gujarat has launched the Viksit Gujarat Data Center Policy 2026–2029 (“Policy”), a dedicated sectoral framework aimed at establishing the State as a hub for hyperscale, colocation and artificial-optimised data centers, replacing the smaller-scale incentives under the Gujarat Information Technology and Information Technology Enabled Policy 2022–2027. The Policy introduces a substantially enhanced incentive package (both financial and non-financial in nature) and operational support provisions for allied components in data center infrastructure.
S. No.
Basis
Particulars
1.
Fiscal Incentives
Capital Subsidy – Capital subsidy of 2.5% on Eligible Fixed Capital Investment (“EFCI”) made within the eligible investment period under this Policy for Dholera region. The eligible entity may submit claim(s) for such incentive up to a period of 10 years from the date of grant of in-principal approval under this Policy. The EFCI considered under this Policy shall not exceed 80% of the total Fixed Capital Investment (“FCI”) of the approved data center entity or INR 60,000 Crore, whichever is lower.
Interest Subsidy – An interest subsidy of up to 4% per annum for 10 years (capped at INR 25 crore per year) on term loans sanctioned by a financial institution or bank. This is applicable only on term loan used for FCI.
Power Tariff Subsidy – A subsidy of INR 1 per unit for 20 years from the date of commencement of commercial operations.
Stamp Duty and Registration Fees – 100% exemption on stamp duty and registration fees paid to the Government for lease/purchase of land
Electricity Duty – 100% reimbursement of electricity duty actually paid for a period of 20 years from the date of commencement of commercial operations, subject to applicable laws, rules and regulations
State Goods and Services Tax (“SGST”) Benefits – SGST benefits, covering 100% reimbursement of SGST paid on (a) purchase of plant and machinery for eight years from grant of in-principal approval; (b) building and allied infrastructure consumption for 8 years from grant of in-principal approval; and (c) 100% net SGST on eligible operational services consumed within the state for 20 years from commencement of commercial operations.
Captive Desalination Plant – Data center entity establishing a CaptiveDesalination Plant will be provided additional support of 20% of capital expenditure (excluding land cost) or INR 2 crore per MLD, whichever is lower for plants with a capital support up to 20 MLD for 1 GW data center capacity, with proportionate scaling.
Total financial incentives under the Policy will be limited to 75% of EFCI made within the Eligible Investment Period (“EIP”), being 8 years from the date of grant of in-principal approval under the Policy (extendable by up to 2 years), and will be disbursed over 20 years, with annual disbursements capped at 5% of the total eligible incentive amount which shall be carried forward and disbursed in the subsequent years.
2.
Non-Fiscal Incentives
Distribution License – The State Government may facilitate and support applications of data center entity, either directly or through an infrastructure co‑developer, to the Gujarat Electricity Regulatory Commission for grant of distribution license for data center activity.
Transmission/substation related infrastructure – The State Government will facilitate provision of dual power supply to the data center entity substation through 2 independent and electrically diverse feeders, sourced from the State Transmission Utility or Central Transmission Utility network.
Open Access – Such projects shall be permitted to procure power through open access as per the prevailing electricity regulations
3.
Other Operational Provisions
Only data center projects who may applied and received in-principle approval 3 years before the current policy with approved installed IT load capacity of 150 MW or above shall be eligible under this Policy;
Incentives under this Policy shall be available for establishment of data centers up to an aggregate installed capacity target of 7.5 GW in the State;
Data center entity shall be allowed additional floor space index permitted under applicable local development control regulations;
The parking area requirement of a data center entity will be 1 equivalent car space per 1000 Sq. metres of the designated office area;
Up to 70% ground coverage shall be allowed to the data center entity;
Data center entity shall be permitted to build up to 3.6 metre boundary wall as per relevant Gujarat Development Control Regulations (“GDCR”);
Chillers on the roof can be installed subject to structural safety and clearance from Airports Authority of India;
The utilities, diesel generator sets and distribution transformers allowed to stack at each floor/rooftop as per the respective GDCR entity, provided a no-objection certificate from the fire safety department is obtained;
Internal road width shall be allowed as per applicable fire and safety norms for data center entity
Round‑the‑clock uninterrupted water supply shall be provided up to the doorstep of data center entity;
Sub‑leasing or sub‑letting of land/built‑up area within a data center entity shall be permitted at first instance without any additional costs, subject to compliance with applicable laws and regulations;
The State Government shall facilitate and support eligible data center entities in obtaining necessary statutory approvals, clearances, and registrations, for establishment and operation of data center projects;
Data center entity shall ensure that a minimum of 51% of the electricity consumption for operations is sourced from green and renewable energy;
Meters shall be installed in conformity with the Central Electricity Authority, Indian Electricity Grid Code and Gujarat Electricity Grid Code;
Capital subsidy on the battery energy storage component shall not exceed 10% of total capital subsidy claimed by the data center under this Policy.
The operation, management, and support for data centers will be treated as an “Essential Service” under the Gujarat Essential Services Maintenance Act, 1972.
The FCI and EFCI of a data center entity may be made either independently or through a joint venture, special purpose vehicle, subsidiary, affiliate, developer, operator, user entity, or any combination thereof, and such investments shall be jointly considered for by the High Powered Committee (“HPC”) and State Government, as applicable.
The Policy will be operative for a period of 3 years since its notification, unless superseded by a new policy orx extended by the HPC.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
