The “Swadeshi” movement has once again created buzz after the US Tariff imposition. It lit up the Vocal for Local movement, which was launched in 2020. The Indian government is strengthening its digital backbone through hefty investments and easing norms in the IT infrastructure.
According to the National Data Centre Policy draft, the Indian government is considering a tax exemption for data centers for up to 20 years to foster IT infrastructural growth. The draft projects significant growth in IT infrastructure. Positive impacts include job creation, successful attainment of projected data center capacity targets, making this sector energy efficient.
The draft is with the stakeholders for consultation and review. Its design is aimed at making India a global hub for cloud infrastructure, AI innovation, and digital services like domains, addressing the rapidly growing need for computing power.
Objectives
The draft outlines these key incentives proposed for data centers:
- Tax exemption: Up to 20 years, based on capacity, efficiency, and employment.
- GST Input Tax Credit: Construction materials, cooling systems, HVAC systems, and electrical equipment may qualify for GST input tax credit.
- Foreign Contenders: Companies leasing or operating at least 100 MW of capacity could be granted permanent establishment status.
- AI Boost: Eligible firms may be encouraged to set up AI development centers in the same city as their data centers.
A media official quoted, “This will help create new jobs as well as strengthen domestic capacity in advanced technologies, such as AI, Cloud computing, and cybersecurity, not just in metro cities but also in Tier-II and Tier-III towns.”
India’s data center industry is marking skyrocketing growth at 24% CAGR since 2019. A total of 1,825 Mw will be added to the grid by 2027, according to JLL. As occupancy rates run at 75–80 percent, supply is far outstripping demand.
“As India’s digital economy scales up, this demand will only intensify, underscoring the urgency for next-gen infrastructure that can support this growth,” CBRE (American commercial real estate services) noted in a recent report.
Therefore, the race to build this next-generation infrastructure is about more than just keeping pace; it is a strategic imperative to secure India’s position as a global digital leader. By proactively addressing this need, the country can transform a logistical challenge into a long-term competitive advantage, fostering innovation, attracting foreign capital, and creating a more inclusive digital economy for all its citizens.
