Other BriefingsGujarat Data Center Policy 2026-29: Capital Subsidies, Power Tariffs & Tax Incentives
The Gujarat state government has introduced the Data Center Policy 2026-2029, replacing the data center incentive provisions under the IT/ITES Policy 2022-2027. The new framework shifts the state’s focus from supporting relatively smaller facilities to attracting hyperscale and large colocation data centers through a comprehensive package of fiscal incentives, infrastructure support, and regulatory reforms.
As India’s data center market continues to expand, several states have launched dedicated policies to attract investment. Gujarat’s latest policy seeks to strengthen the state’s competitiveness by encouraging large-scale investments in digital infrastructure.
The policy came into effect on July 9, 2026, and will remain in force for three years, with the possibility of extension by the Gujarat Government or the High-Powered Committee (HPC).
Gujarat Data Center Policy 2026-29: Key incentives
The policy combines capital support with long-term operational incentives to reduce both project development and operating costs.
Capital and financing support
Projects located in the Dholera Special Investment Region (SIR) are eligible for a 2.5 percent capital subsidy on Eligible Fixed Capital Investment (EFCI). Eligible expenditure includes buildings, electrical and mechanical systems, cooling infrastructure, networking, power backup, security systems, and other essential data center infrastructure. Land acquisition, land development, and semiconductor chips are excluded from the calculation.
Eligible developers can also receive an interest subsidy of up to 4 percent annually for 10 years, subject to an annual cap of INR 250 million (US$2.6 million), on loans obtained from banks or financial institutions.
Power and utility incentives
Under the Gujarat Data Center Policy 2026-29, developers can benefit from the following measures to reduce long-term operating costs:
- INR 1/unit (US$0.010) power tariff subsidy for 20 years
- 100 percent reimbursement of electricity duty for 20 years
- Permission to procure electricity through open access
To qualify, at least 51 percent of electricity consumed for core operations must come from renewable or green energy sources, encouraging developers to adopt renewable power procurement strategies.
Tax incentives
Eligible projects can claim 100 percent exemption from stamp duty and registration charges on land transactions. Additionally, the policy offers reimbursement of state goods and services tax (SGST) paid on plant and machinery, building infrastructure, and eligible operational services, subject to prescribed conditions and timelines.
Infrastructure support
Developers establishing captive desalination plants may receive a 20 percent capital subsidy, subject to specified project limits.
Overall financial assistance under the policy is capped at 75 percent of eligible fixed capital investment, with incentives disbursed over a 20-year period.
Regulatory support
In addition to financial incentives, the policy introduces several measures to simplify project development and operations.
Construction relaxations
Eligible projects will benefit from:
- Additional floor space index (FSI)
- Lower parking requirements
- Flexibility in ground coverage and floor heights
- Permission for rooftop installations required for data center operations
Operational facilitation
As per the policy, the state will facilitate statutory approvals and provide dual power supply through independent feeders, uninterrupted water supply, and assistance in obtaining electricity distribution licenses where applicable.
The policy also designates data center operations as an essential service under the Gujarat Essential Services Maintenance Act, 1972.
Policy period and eligibility
Incentives will be available until the state achieves its target of 7.5 GW of installed data center capacity. Eligible applicants must secure in-principle approval within the policy period, i.e., between 2026 and 2029.
The policy applies to companies, special purpose vehicles (SPVs), and other legally recognized entities developing or operating data centers with a minimum approved IT load capacity of 150 MW. Projects already receiving incentives under another Gujarat government scheme are not eligible to claim benefits under this policy. However, eligible firms may avail both central government incentives and benefits under the Gujarat Data Center Policy 2026-2029, subject to the applicable conditions.
Outlook
The Gujarat Data Center Policy 2026-2029 aims to establish a comprehensive package of long-term financial incentives, regulatory support, and infrastructure facilitation. By focusing on large-capacity projects, renewable energy adoption, and operational efficiency, the state seeks to position itself as a leading digital infrastructure hub while attracting major domestic and global data center developers.
(US$1 = INR 95.31)
About Us
India Briefing is one of five regional publications under the Asia Briefing brand. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Delhi, Mumbai, and Bengaluru in India. Dezan Shira & Associates also maintains offices or has alliance partners assisting foreign investors in China, Hong Kong SAR, Vietnam, Indonesia, Singapore, Malaysia, Mongolia, Dubai (UAE), Japan, South Korea, Nepal, The Philippines, Sri Lanka, Thailand, Italy, Germany, Bangladesh, Australia, United States, and United Kingdom and Ireland.
For a complimentary subscription to India Briefing’s content products, please click here. For support with establishing a business in India or for assistance in analyzing and entering markets, please contact the firm at india@dezshira.com or visit our website at www.dezshira.com.
- Previous Article India Manufacturing Tracker 2026
- Next Article
