A new framework asks Indian states to assess infrastructure, resource and economic readiness before competing for large-scale data-centre investment.
NITI Aayog’s Frontier Tech Hub has issued a new framework designed to help state governments judge whether they are ready for large-scale data-centre investment, as India’s digital infrastructure expands and the demands of artificial intelligence, cloud computing and other data-heavy services accelerate.
According to the statement released by NITI Aayog, the framework is intended to shift state policy away from a simple race to attract investment and towards a more measured approach that prioritises investment-ready infrastructure, resource protection and longer-term economic returns. It has been developed with inputs from industry, the Ministry of Electronics and Information Technology, the Ministry of Power and the Department for Promotion of Industry and Internal Trade.
The report comes at a time when India’s data-centre capacity has risen sharply, from about 375 MW in 2020 to roughly 1.5 GW now, according to the official statement. That expansion reflects rising demand for AI, cloud services, high-performance computing and other digital applications that require reliable power, cooling and land. The Aayog said data centres are becoming critical infrastructure for the country’s wider technological and economic ambitions.
The framework sets out a structured method for evaluating proposals, including checks on infrastructure readiness, environmental sustainability, economic value and implementation readiness. Business Standard reported that the document urges states to consider whether they have adequate electricity, water, land and supporting infrastructure before approving projects. It also recommends clearer project categories, such as distinguishing colocation facilities from active compute services, so that incentives can be linked more precisely to outcomes.
NITI Aayog said the model is meant to help states identify constraints earlier, reduce execution risk and improve decision-making. The statement also pointed to time-bound approvals, clearer accountability and monitoring of commitments as part of the approach. In parallel, the government has already signalled support for the sector through measures including a tax holiday until 2047 for eligible foreign cloud service providers using India-based data-centre infrastructure.
Prof Abhay Karandikar, a member of NITI Aayog, said the opportunity lay not only in attracting capital but also in strengthening domestic research, industry-academia collaboration and Indian participation across the data-centre technology chain, according to the statement. The framework, as presented by NITI Aayog, is therefore as much about industrial strategy as it is about site selection: a guide for states to plan more carefully, move faster and build capacity that can be sustained over time.
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