Karnataka Targets 1GW Data Centres with Rs 1,300 Crore Push
Karnataka's new policy aims for 1GW of sustainable data centre capacity by 2031, tying financial incentives to strict power and water efficiency standards.
Key points
- Karnataka's new policy targets 1GW of data centre capacity by 2031 with a 1,300.45 crore rupee budget.
- Financial incentives are conditional on meeting strict Power and Water Usage Effectiveness standards.
- The initiative aims to expand infrastructure beyond Bengaluru to Mysuru and Mangaluru using renewable energy.
The Karnataka cabinet has approved a five-year Sustainable Data Centre Policy designed to reach one gigawatt of cumulative capacity by 2031. The initiative carries a budget framework of 1,300.45 crore rupees and seeks to capture 10 to 12 percent of India's total AI-ready infrastructure. This expansion comes as demand from artificial intelligence and cloud services drives up energy consumption across the state.
According to a report by MediaNama, the policy links financial incentives directly to environmental performance. Developers must meet specific benchmarks for power and water usage to qualify for support. This approach marks a shift from previous frameworks that focused primarily on investment volume without strict sustainability conditions.
Incentives tied to resource efficiency
The government plans to create dedicated Sustainable Data Centre Zones and corridors outside of Bengaluru. Site selection will rely on resource heat mapping to ensure locations have adequate power and water availability. Incentives will cover capital investment, land, and renewable energy integration, but only if operators maintain high efficiency standards.
Operators will be monitored using Power Usage Effectiveness and Water Usage Effectiveness metrics. These measures track how much energy and water are consumed per unit of computing power. The policy encourages the use of renewable energy and efficient cooling systems to reduce the environmental footprint of data centres.
Expanding beyond Bengaluru limits
This policy builds on an earlier plan from April to develop data centre parks in Mysuru and Mangaluru. One proposed site near Hoskote includes access to solar power from Pavagada and treated water supplies. The new framework provides a broader structure for these projects, including specific requirements for local manufacturing and employment in construction and maintenance.
IT minister Priyank Kharge described the move as a necessary course correction. He noted that while Karnataka was early in recognizing data centre importance, the rapid growth of AI has changed infrastructure requirements. The state aims to attract digital economy investments while ensuring responsible use of natural resources.
Resource constraints and execution challenges
The focus on power and water reflects a critical challenge in data centre expansion. India's total capacity has grown from 375 megawatts in 2020 to about 1,575 megawatts, driven by high-performance computing needs. However, experts question whether the state has sufficient personnel and infrastructure to support such rapid growth without straining local resources.
Economist Prof R S Deshpande has raised concerns about competing demands for energy and water in districts like Tumakuru. The policy will be implemented in phases over five years, anchored by the Department of Electronics and Information Technology. Karnataka Innovation and Technology Services will serve as the registration interface, while Karnataka Udyoga Mitra will handle clearances.
