Viksit Gujarat Data Center Policy 2026–29: The Investment Case for Global Hyperscale and AI Infrastructure Companies

The Government of Gujarat launched the Viksit Gujarat Data Center Policy 2026–29 on 9 July 2026 to attract large-scale investments in hyperscale data centres, artificial intelligence infrastructure, cloud computing and related digital services. The policy targets approximately 7.5 GW of data-centre capacity and an estimated investment of ₹6 lakh crore.

The scale of investor interest is equally significant. At the time of the policy’s launch, Gujarat reportedly had data-centre proposals aggregating around 10 GW, exceeding the capacity contemplated under the policy. The state is positioning Dholera as its principal destination for large AI-ready and hyperscale campuses.

For CEOs, CFOs, infrastructure funds and global site-selection teams, the attractiveness of the policy lies in its combination of capital assistance, long-duration power incentives, tax reimbursements, renewable-energy access, water-security measures and specialised construction relaxations.

A Policy Designed for Large-Scale Operators

The policy is primarily directed at companies developing infrastructure at a hyperscale level rather than small enterprise data centres. Reported eligibility conditions prescribe a minimum approved IT load of 150 MW, although the final position must be confirmed from the detailed policy document and implementation guidelines.

The principal investor categories expected to benefit include:

• global cloud and hyperscale operators;
• AI and GPU computing infrastructure providers;
• wholesale and co-location data-centre developers;
• high-performance computing operators;
• infrastructure and sovereign investment funds; and
• integrated renewable-energy and data-centre platforms.

This scale-based approach is intended to create concentrated digital infrastructure clusters with sufficient power, land, cooling and connectivity capacity to serve global workloads.

Fiscal Incentives and Their Impact on Project Economics

The reported incentive package addresses both initial capital expenditure and recurring operating expenditure. This is commercially important because data-cententre investments involve substantial upfront construction costs, while power, cooling and financing costs determine the project’s long-term profitability.

The 2.5% capital subsidy is reportedly available specifically for eligible projects established in the Dholera region. An interest subsidy of up to 4% on eligible term loans for 10 years, subject to a ceiling of ₹25 crore annually, could materially reduce financing costs during the initial operating period.

For CFOs, these incentives must be evaluated through their effect on project IRR, debt-service coverage, payback period and free cash flows. Their value will depend on the eligible investment base, timing of claims, annual disbursement limitations and conditions attached to continued operations.

Twenty-Year Power Support: The Policy’s Strongest Commercial Proposition

Electricity is among the largest recurring costs for any data centre. The cost becomes even more significant for AI-ready facilities equipped with high-density GPU clusters, advanced cooling systems and uninterrupted power infrastructure.

The reported ₹1 per unit power tariff subsidy for 20 years, together with 100% reimbursement of electricity duty for the same period, may therefore have a greater financial impact than a one-time capital subsidy.

For illustration, a 150 MW facility operating at a high utilisation level may consume more than one billion units of electricity annually. Even without assuming a specific load factor or power usage effectiveness ratio, a ₹1 per unit concession can translate into substantial annual savings over the operating life of the asset.

Long-duration support also improves visibility in financial modelling. It allows investors to estimate energy costs over a 20-year period, strengthen projected EBITDA margins and improve the bankability of projects funded through long-term infrastructure debt.

Dholera as the Preferred Hyperscale Destination

Dholera is expected to become the central location for Gujarat’s data-centre investment programme. In addition to the reported 2.5% capital subsidy, the region offers attributes that are difficult to achieve in conventional metropolitan locations.

These include:

• availability of large and contiguous land parcels;
• capacity for phased campus development;
• proximity to renewable-energy generation;
• planned trunk infrastructure;
• scope for dedicated power and water systems;
• lower urban congestion and land-use restrictions; and
• connectivity through proposed airport and regional transport infrastructure.

The Gujarat Budget 2026–27 reportedly included substantial allocations for trunk infrastructure, internal development and water pipelines in Dholera Special Investment Region. These investments support not only semiconductor manufacturing but also the utilities required for large data-centre campuses.

Investor momentum is already visible. L&T Vyoma has announced plans for a ₹25,000 crore, 250 MW green and AI-ready hyperscale data-centre campus at Dholera following an agreement with the Gujarat Department of Science and Technology.

Renewable Energy as a Location Advantage

The policy reportedly requires at least 51% of the electricity used for core data-centre operations to be sourced from renewable energy. This condition aligns the state’s incentive framework with the sustainability commitments of international cloud, technology and infrastructure companies.

Gujarat has an established renewable-energy ecosystem spanning utility-scale solar, wind, hybrid power and open-access procurement. This gives investors several potential structuring options, including:

• long-term renewable power purchase agreements;
• captive generation;
• group-captive arrangements;
• hybrid wind-solar procurement; and
• renewable energy combined with storage solutions.

For global operators, renewable-energy availability is not merely a regulatory requirement. It directly affects carbon-reduction commitments, ESG reporting, customer procurement standards and access to sustainability-linked financing.

An integrated site strategy in Gujarat could combine data-centre development with captive or contracted renewable generation, thereby reducing exposure to future grid tariffs and improving the project’s environmental credentials.

Water Security and Desalination Assistance

Cooling infrastructure requires reliable access to water, particularly for facilities using water-intensive cooling systems. Large data-centre projects can face opposition or operating risk when their water requirements compete with residential, agricultural or conventional industrial consumption.

The Gujarat policy addresses this issue by encouraging the use of desalinated water. Reported support for desalination infrastructure is limited to 20% of eligible capital expenditure or ₹2 crore per million litres per day, whichever is lower.

This provision can support captive or common desalination facilities and reduce dependence on freshwater resources. It is especially relevant for large campuses where water availability must be secured before construction and commissioning.

For investors, a dedicated water solution can improve operational continuity, reduce community-related risks and support compliance with global environmental standards.

Construction and Regulatory Flexibility

Data centres require building configurations that differ materially from ordinary commercial and industrial projects. High floor loads, specialised cooling equipment, backup generators, transformers, security systems and fire-safety infrastructure can create approval and design challenges under conventional development regulations.

Reported policy measures include:

• fast-track and single-window approvals;
• dual power feeders;
• open-access facilitation;
• ground coverage of up to 70%;
• additional floor space index;
• relaxed parking and floor-height requirements;
• rooftop installation of chillers;
• higher boundary walls;
• underground fire-water tanks; and
• multi-level stacking of generators and transformers.

These relaxations can improve land utilisation, reduce redesign requirements and accelerate project execution. For hyperscale developments, where delays can materially affect customer commitments and financing costs, approval facilitation may be as valuable as direct fiscal assistance.

Gujarat’s Wider Digital and Industrial Ecosystem

The investment proposition extends beyond incentives. Gujarat is developing multiple sources of enterprise and institutional demand for cloud, AI and digital infrastructure.

GIFT City provides a growing ecosystem of banks, funds, fintech companies, insurance entities, capital-market intermediaries and global capability centres. These businesses require secure, scalable and low-latency infrastructure, particularly for regulated financial workloads.

The semiconductor and electronics investments developing in Dholera and Sanand can generate demand for high-performance computing, industrial cloud systems, simulation, design, automation and data processing.

Gujarat’s manufacturing base—including chemicals, pharmaceuticals, engineering, automobiles, logistics and energy—also creates increasing demand for enterprise cloud migration, industrial analytics, connected operations and AI-driven systems.

Its western coastline additionally offers the long-term possibility of cable landing infrastructure, which could strengthen international connectivity and reduce dependence on data-centre clusters concentrated in established metro markets. However, connectivity execution and network redundancy will remain important site-selection considerations.

Conclusion

The Viksit Gujarat Data Center Policy 2026–29 presents a focused investment proposition for large hyperscale, cloud and AI infrastructure projects. Its most commercially attractive features are the 20-year power tariff support, electricity-duty reimbursement, interest subsidy, Dholera-specific capital assistance, renewable-energy ecosystem, desalination support and specialised construction relaxations.

For global investors, Dholera deserves evaluation as a long-term campus location capable of supporting phased expansion, dedicated utilities and renewable-energy integration. The final investment decision should, however, be based on the official policy document, Government Resolution and implementation guidelines once issued, particularly for confirming eligible expenditure, incentive-disbursement conditions and project-level obligations.