PIB backgrounder: data centres get infrastructure status and incentives

India’s data centre policy: what happened?

Every bank balance check, UPI payment or AI chat runs on servers in a data centre. As India goes digital, it needs many more of them, and they need land, power, cooling and water. This backgrounder pulls together what the Government is doing.

• Data centres were placed in the Harmonized List of Infrastructure in Union Budget 2022-23, giving easier access to long-term credit.
• Union Budget 2026-27 gave a tax holiday until 2047 to eligible foreign cloud service providers using India-based data centres.
• Installed capacity reached 1.57 GW by August 2026.
• CEA estimates data centre power demand could reach 17 GW by 2031-32.
• BIS has standards on PUE, CUE, CER and WUE to measure efficiency.

What is inside a data centre?

• Power: UPS for instant backup, plus generators.
• Cooling: HVAC, airflow management, liquid cooling.
• IT: servers, storage (HDDs and SSDs), networking, fibre links.
• Management software, virtualisation and automation.

What does the Government itself run?

• NIC has National Data Centres at its Delhi headquarters, Pune, Hyderabad and Bhubaneswar.
• NIC also runs 37 smaller data centres in State capitals.

Which linked schemes support data centres?

How does a data centre answer your request?

1. Connect: request travels over the network
2. Security layer checks it
3. Load balancer sends it to a free server
4. Application server works out what is needed (using APIs if required)
5. Database server fetches the data
6. Response returns to your device, often in 1 to 2 seconds

Why does India’s data centre policy matter?

What are the challenges in India’s data centre policy?

• Power: data centres must run every second; demand could reach 17 GW by 2031-32.
• Water: cooling needs water; groundwater use is regulated by Ministry of Jal Shakti guidelines.
• Carbon: energy use must shift to clean sources.
• Security: the release itself calls for strong standards and cybersecurity.

What should be done next on India’s data centre policy?

• Pair capacity growth with renewable and nuclear power (the SHANTI Act supports nuclear for data centres).
• Adopt closed-loop and liquid cooling to save water.
• Apply BIS efficiency standards and BEE building codes (ECBC 2017, ECSBC 2024).
• Build domestic skills in computing, semiconductors and energy.

What can Prelims ask on India’s data centre policy?

• Data centres got infrastructure status in Union Budget 2022-23 (Harmonized List).
• Capacity: about 375 MW (2020) to 1.57 GW (August 2026); nearly 8 GW by 2030.
• BIS committee LITD 31 covers cloud computing, IT and data centres.
• PUE = Power Usage Effectiveness; WUE = Water Usage Effectiveness.
• SHANTI Act: supports nuclear power, including Small Modular Reactors.

How to write about India’s data centre policy in Mains

Practice question (15 marks, 250 words): Data centres are the “invisible engines” of India’s digital economy. Discuss the policy support for them and the energy and water challenges they pose.

• Intro: 1.57 GW capacity (August 2026), nearly 8 GW by 2030.
• Policy: infrastructure status 2022-23; tax holiday to 2047; linked schemes.
• Challenges: power (17 GW by 2031-32), water, carbon, security.
• Responses: renewables, SHANTI Act, BIS and BEE standards, liquid cooling.
• Conclusion: data sovereignty and Viksit Bharat by 2047.