19 - 09 - 2026

Karnataka Targets 1 GW Data Centre Capacity Under New Sustainable Policy

Karnataka has approved a new five-year policy aimed at positioning the state as a globally competitive hub for sustainable, AI-ready data centre infrastructure, with a target of achieving 1 GW of cumulative data centre IT load by 2031 and accounting for 10–12% of India’s AI-ready data centre capacity.

The Karnataka Sustainable Data Centre Policy 2026–2031 seeks to attract domestic and international investment across the data centre value chain while addressing the rapidly rising demand for computing infrastructure driven by artificial intelligence, cloud computing, IoT, 5G, Global Capability Centres and financial technology.

The policy has been approved with a revised implementation budget framework of ₹1,300.45 crore over five years. It combines investment incentives with infrastructure development, sustainability measures, research and development, skilling and ecosystem expansion.

The policy also marks an attempt to move data centre growth beyond Bengaluru by developing regional digital corridors and supporting Karnataka’s broader Beyond Bengaluru strategy.

Priyank Kharge, Minister for Home, Information Technology, Biotechnology and E-Governance, said the state’s approach had to evolve as the technology landscape changed, particularly with the rapid expansion of AI and growing awareness of the environmental footprint of large-scale computing infrastructure.

“Karnataka was among the early states to recognise the importance of data centres and create a policy framework to support their growth,” Kharge said. “The Sustainable Data Centre Policy is therefore an important course correction — one that allows us to continue attracting the data infrastructure that the digital economy needs, while making sustainability, energy efficiency and responsible use of water central to how we plan and develop this sector.”

The policy places particular emphasis on the sustainability challenges associated with data centres, including electricity consumption, cooling requirements and water use. It proposes greater adoption of renewable energy, advanced cooling technologies, improved water management and monitoring of Power Usage Effectiveness (PUE) and Water Usage Effectiveness (WUE).

“Our objective is not simply to add more capacity, but to build the right capacity, in the right locations and with the right infrastructure,” Kharge said, pointing to renewable energy, newer cooling technologies, water management and stronger connectivity as priorities.

From data centres to AI-ready infrastructure

The policy extends beyond conventional hyperscale data centres to cover a broader digital infrastructure ecosystem. Its investment framework encompasses data centre units and parks, operators, edge data centres, cable landing stations and allied infrastructure.

It also specifically identifies infrastructure required for the next generation of computing, including AI-enabled and intelligent data centres, edge computing, cable landing stations and AI- and quantum-ready facilities.

A proposed Centre of Excellence for Data Centres, along with Sustainable Data Centre Zones and Data Centre Parks, is intended to support applied innovation, research and ecosystem development.

One of the policy’s more distinctive elements is Data Centre Resource Heat Mapping, which is designed to support evidence-based decisions on the availability of water and energy and guide sustainable site selection.

The approach reflects the growing importance of resource availability in determining where large computing facilities can be developed, particularly as AI workloads increase power and cooling requirements.

The policy provides for comprehensive investment incentives covering capital investment, project establishment, land, connectivity, electricity, green energy and access to demand centres. Support is also proposed for R&D, skilling and MSME participation.

Karnataka is also seeking to build a local industrial ecosystem around data centres by supporting manufacturing, MSMEs, research and skilled employment across data centre design, construction, operations and maintenance.

Performance-linked sustainability incentives will encourage operators to improve power and water efficiency and adopt sustainable operating practices.

The policy’s focus on regional expansion is equally significant. While Bengaluru remains the centre of Karnataka’s technology economy, the framework seeks to encourage data centre investments in emerging corridors elsewhere in the state, creating a more distributed digital infrastructure network.

Five-year implementation roadmap

Implementation will follow a phased five-year roadmap. The initial phase will focus on operationalising the policy, facilitating investors and identifying Data Centre Zones and Parks. Subsequent phases will emphasise ecosystem expansion, R&D, skilling, sustainability-linked incentives and consolidation of Karnataka’s position as a sustainable data centre hub.

The Department of Electronics, Information Technology, Biotechnology and Science & Technology will anchor implementation, while Karnataka Innovation and Technology Services (KITS) will serve as the registration and policy implementation interface for eligible entities.

Karnataka Udyoga Mitra (KUM), under the Department of Commerce and Industries, will act as the Single Window Agency for clearances related to data centre proposals.

The state government is positioning the policy against a broader shift in the digital economy, where AI and other compute-intensive technologies are increasing demand for high-capacity, low-latency and reliable digital infrastructure.

For Karnataka, the objective is therefore not simply to attract more server capacity, but to build an integrated ecosystem around it—combining energy, connectivity, water management, AI infrastructure, research, skilled talent and local industry.

With a 1 GW IT-load target and an ambition to capture 10–12% of India’s AI-ready data centre capacity by 2031, the policy sets out a roadmap for Karnataka to expand its role from a technology-services hub into a major centre for the physical infrastructure underpinning the next phase of India’s digital and AI economy.

By Subramanya Joshi