Meity State-wise Data Center Policies, Subsidies, Incentives, Approval in India
State Data Center Policies, Subsidies, Incentives, Approvals by Meity
Several Indian states have introduced data center policies to attract investment and promote the development of data center infrastructure. Karnataka’s Data Centre Policy (2022-2027) offers financial incentives, uninterrupted power supply, and streamlined approval through a single-window clearance system. Tamil Nadu, with its 2021 Data Centre Policy, provides exemptions from building norms, renewable energy access, and subsidies for infrastructure.
Uttar Pradesh’s Data Centre Policy (2021, amended in 2022) offers subsidies on land costs and streamlined approval processes, while Odisha’s 2022 policy focuses on basic infrastructure, local manufacturing incentives, and reduced compliance costs. Telangana is promoting data centers with significant budget allocations, operational subsidies, and infrastructure status.
Maharashtra’s IT-ITES Policy (2023) supports infrastructure development, with simplified approvals and incentives for renewable energy. West Bengal provides subsidies for land and utilities through its Data Centre Policy (2021), alongside relaxed building norms. Haryana, under its 2022 policy, ensures municipal building norm exemptions, self-certification for compliance, and a single-window clearance.
Other states such as Andhra Pradesh, Gujarat, Madhya Pradesh, Punjab, Rajasthan, Himachal Pradesh, and Chhattisgarh are also offering incentives ranging from land and utility subsidies to financial support for infrastructure development, reduced power tariffs, and tax exemptions. These state-specific policies and incentives underscore India’s focus on becoming a global hub for data center infrastructure, making it a highly attractive destination for investors and developers in the data center industry.
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Common Features Across Different State Data Center Policies, Subsidies, Incentives by Meity
- Infrastructure Status: Many states have granted data centers infrastructure status, facilitating easier access to financing from banks and financial institutions.
- Single-Window Clearance: Several states have implemented a single-window system to streamline the approval process for data center projects.
- Financial Incentives: Common incentives include subsidies on land acquisition, electricity tariffs, and tax exemptions to attract investments.
- Focus on Renewable Energy: Many policies encourage the use of renewable energy sources to power data centers, aligning with national sustainability goals.
- Non-Financial Incentives: Many states offer relaxations in building norms, allowing for specialized construction tailored to data center needs, and reducing ongoing compliance costs.These policies collectively aim to create a conducive environment for data center operators, addressing their unique requirements and fostering growth in the digital economy. These state-specific policies reflect a competitive approach to attracting investment in the data center sector, recognizing its importance in supporting the digital economy and ensuring data localization in India.
Some State Data Center Policies, Subsidies, Incentives by Meity
Guide to Setting Up a Data Center in India
A. Selecting a Model
When establishing a data center in India, there are various business models available:
- On-Site Data Center
In this model, the organization builds and manages its own data center on its premises. This gives full control over data, security, and allows for expansion or consolidation as needed. - Colocation/Third-Party Data Center
Here, companies lease infrastructure from a third-party provider instead of building their own. The provider manages the operations, and the company accesses data via cloud services.
B. Incorporating a Company
After choosing a business model, the next step is registering a company under the Companies Act, 2013. The business can take forms like a private limited company or LLP. After receiving the incorporation certificate, important documents such as PAN, TAN, DIN, and Digital Signature Certificate (DSC) must be obtained.
C. Acquiring Required Licenses
Setting up a data center in India involves obtaining about 30 approvals from various authorities, including Pre-Construction, Post-Construction, Statutory Approvals, and licenses like Fire Hazard Approvals, Cloud Service Provider (CSP) licenses, Other Service Provider (OSP) licenses, and others.
Regulatory Framework for Data Centers in India
A. Draft Meity Data Center Policy, 2020
The Ministry of Electronics and Information Technology (MeitY) proposed the Draft Data Center Policy, 2020 to support the sector with the following key interventions:
- Infrastructure Status: Provides infrastructure status to data centers, easing access to long-term financing.
- Single Window Clearance: A streamlined system for obtaining approvals.
- Specific Zones: Establishing dedicated Data Center Economic Zones with affordable land and pre-approved clearances.
- Essential Services: Recognizing data center services as essential, ensuring continuity during crises.
- Industry Council: Formation of a Data Center Industry Council to liaise between operators and the government.
- Joint Ventures and FDI: Encourages joint ventures between foreign investors and domestic companies for data center development. 100% FDI is allowed except for investments from restricted countries, where prior government approval is required.
B. State-Specific Data Center Policies
Several Indian states have already adopted their own data center policies to incentivize investment:
1. Maharashtra Data Center Policy
- Declared as an essential service.
- Offers electricity tariff subsidies, stamp duty waivers, and land at subsidized rates.
2. Uttar Pradesh Data Center Policy
- Incentives like capital subsidy, reduced electricity tariff, and land at concessional rates.
- Focus on creating at least three data center parks.
3. Karnataka Data Center Policy
- Capital subsidy, interest subsidy, and exemption from electricity duty for 5 years.
- Focus on developing Tier 2 and Tier 3 cities.
4. Tamil Nadu Data Center Policy
- Capital subsidy for data center developers and cloud providers.
- Exemption from stamp duty and electricity tax for 5 years.
5. Telangana Data Center Policy
- Incentives like capital investment support, power subsidies, and stamp duty reimbursement.
- Hyderabad promoted as a key data center hub.
6. West Bengal Data Center Policy
- Financial support for setting up data centers, with focus on green initiatives.
- Stamp duty reimbursement and reduced electricity tariffs.
7. Gujarat Data Center Policy
- Offers land and infrastructure incentives, along with electricity and stamp duty waivers.
- Focus on establishing green data centers and data center parks.
8. Rajasthan Data Center Policy
- Incentives for land allocation and power supply.
- Special provisions for promoting renewable energy use in data centers.
9. Madhya Pradesh Data Center Policy
- Focus on providing land and infrastructure support at subsidized rates.
- Financial support for electricity and data center equipment.
10. Andhra Pradesh Data Center Policy
- Promotes data centers with focus on renewable energy usage.
- Offers land at concessional rates and financial incentives on power tariffs.
11. Odisha Data Center Policy
- Encourages development of data centers in Bhubaneswar and other cities.
- Exemptions on electricity duties and stamp duty reimbursements.
12. Punjab Data Center Policy
- Provides land at industrial rates, subsidies on capital investment, and electricity tariff relief.
- Special incentives for developing data centers in Tier 2 cities.
13. Kerala Data Center Policy
- Focus on developing data centers using renewable energy sources.
- Offers financial incentives, including capital subsidies and tariff concessions.
14. Haryana Data Center Policy
- Incentives for land and power supply, along with a focus on promoting cloud services.
- Electricity duty exemptions and subsidies on capital investment.
15. Assam Data Center Policy
- Aimed at promoting data center infrastructure in the Northeastern region.
- Offers land at subsidized rates and incentives on power tariffs.
16. Jharkhand Data Center Policy
- Provides infrastructure and financial support for establishing data centers.
- Focus on electricity duty exemptions and subsidies for capital investment.
17. Chhattisgarh Data Center Policy
- Encourages establishment of data centers in Tier 2 cities.
- Offers power supply incentives and financial support for infrastructure.
18. Bihar Data Center Policy
- Promotes the development of data centers with land and infrastructure support.
- Focus on financial incentives related to power and capital investment.
19. Goa Data Center Policy
- Incentivizes green data centers with financial support for renewable energy use.
- Exemptions from stamp duty and other tax benefits.
20. Himachal Pradesh Data Center Policy
- Focus on utilizing renewable energy for data centers.
- Offers capital subsidies and exemptions on electricity duty for 10 years.
C. TRAI Recommendations
The Telecom Regulatory Authority of India (TRAI) made key recommendations:
- Incentivization Scheme: Fiscal and non-fiscal incentives for setting up data centers.
- Single Window Portal: A National Single Window System (NSWS) for streamlined clearances.
- Digital Center Economic Zones (DCEZ): SEZs in states like Andhra Pradesh, Kerala, and Karnataka, providing infrastructure for data centers.
- Building Standards: Developing India-specific data center construction standards and certification frameworks with BIS, TEC, and STQC.
- Promote Green Data Centers: Use of Indian Green Building Council (IGBC) and Telecommunication Engineering Center (TEC) frameworks to establish standards for eco-friendly data centers.
- Digital Data Infrastructure: Establishment of the Data Digitization and Monetization Council (DDMC) for ethical data use and a data sharing and consent management framework for telecom subscribers.
Here’s a comprehensive table summarizing the typical approvals and clearances required to establish a data center in India, applicable broadly across the country, with detailed insights from state and central regulations.
Approval/Clearance Requirements for Data Centers in India By Meity
| Stage | S.No. | Clearance | Authority | Details |
|---|---|---|---|---|
| Pre-Construction Stage | 1 | Environment Clearance | Ministry of Environment, Forest and Climate Change (MoEFCC) / State Environmental Impact Assessment Authority (SEIAA) | Necessary for projects exceeding certain thresholds. It covers environmental impact assessments (EIA). |
| 2 | Consent to Establish (CTE) | Central Pollution Control Board (CPCB) / State Pollution Control Boards (SPCB) | Ensures that pollution control measures are in place before commencing the construction. | |
| 3 | Fire Safety Clearance (Provisional NOC) | State Fire and Rescue Services | Approval for fire prevention measures, mandatory before construction. | |
| 4 | Building Permit | Municipal Corporation/Local Development Authority | Necessary for the architectural plans and structural stability of the building. | |
| 5 | Telecom License | Department of Telecommunications (DoT) / Telecom Regulatory Authority of India (TRAI) | Required for data centers that provide communication services. | |
| 6 | Power Connection Approval | State Electricity Board | To ensure sufficient power allocation based on the data center’s capacity requirements. | |
| 7 | Tree Cutting Permission | Forest Department | If trees need to be cut down during construction, permission is required along with compensatory afforestation. | |
| 8 | Water Connection Approval | Local Municipal Water Authority | Ensures the provision of water supply for construction and operation. | |
| 9 | Storm Water Permit | Local Municipality / Pollution Control Boards | To manage rainwater runoff and prevent flooding during construction. |
Construction Stage
| S.No. | Clearance | Authority | Details |
|---|---|---|---|
| 1 | Electricity Safety Certificate | Chief Electrical Inspector to Government (CEIG) | Required for safety inspections of electrical systems during installation. |
| 2 | Labour Law Compliance | Labour Department (Central/State Government) | Ensures statutory requirements for labor safety, wages, and working conditions are followed. |
| 3 | Diesel Generator (DG) Approval | Petroleum and Explosives Safety Organization (PESO) | Ensures DG set installations comply with environmental and safety regulations. |
| 4 | Lift Installation Permit | Public Works Department (PWD) / Electrical Inspector | Required for installing and certifying elevators in the data center facility. |
| 5 | Telecom Tower NOC | Department of Telecommunications (DoT) | Needed if installing telecom towers or antennas on the data center premises. |
Post-Construction Stage
| S.No. | Clearance | Authority | Details |
|---|---|---|---|
| 1 | Occupancy Certificate | Local Municipal Authority | Certifies that the building is safe and fit for occupancy post-construction. |
| 2 | Fire Safety Final NOC | State Fire and Rescue Services | Final clearance ensuring the building complies with all fire safety norms. |
| 3 | Consent to Operate (CTO) | Central/State Pollution Control Board (CPCB/SPCB) | Permits the operation of the data center, ensuring adherence to environmental regulations. |
| 4 | Explosive License for DG Set | Petroleum and Explosives Safety Organization (PESO) | Required if diesel generators are used for backup power in the data center. |
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