Gujarat unveils its Data Centre Policy 2026-29 — the incentives driving Dholera's hyperscale bid

Gujarat has launched the 'Viksit Gujarat — Data Centre Policy 2026-29', naming Dholera its principal hyperscale hub. Beyond the headlines, the policy carries a deep incentive stack — a Dholera-only capital subsidy, power and SGST reimbursements, and support for captive desalination.

Gujarat has launched the 'Viksit Gujarat — Data Centre Policy 2026-29', a three-year policy that positions Dholera as the state's principal hub for hyperscale and AI data centres. Unveiling it in Gandhinagar, Deputy Chief Minister Harsh Sanghavi declared that Dholera is being built as "the world's largest data centre city," with an initial planned capacity of 7.5 GW against investor demand already running at nearly double that level.

But the vision rests on a substantial incentive framework. Here is what the policy actually puts on the table for the entities that build in Gujarat.

A capital subsidy reserved for Dholera

The headline sweetener is ring-fenced for one region. Data centres in Dholera qualify for a 2.5% capital subsidy on Eligible Fixed Capital Investment (EFCI) made within the eligible investment period, claimable for up to 10 years from the date of in-principle approval. It is the only fiscal incentive in the policy explicitly reserved for the Dholera region — a direct lever to concentrate hyperscale investment there.

Fiscal incentives across the board

For eligible projects statewide, the policy layers several benefits on top of any support from the Government of India:

• Interest subsidy — up to 4% for 10 years, capped at ₹25 crore per year, on the term-loan portion funding fixed capital.
• Power tariff subsidy — ₹1 per unit for 20 years from the start of commercial operations.
• Stamp duty & registration fees — 100% exemption on the lease or purchase of land.
• Electricity duty — 100% reimbursement for 20 years.
• SGST — 100% reimbursement on plant & machinery and on building & allied infrastructure (each for 8 years), plus 100% of net SGST on eligible services for 20 years.

The package is capped overall: total financial incentives cannot exceed 75% of EFCI made within eight years, disbursed over a 20-year window, with annual payouts capped at 5% of the total eligible amount and any surplus carried forward.

Water: backing captive desalination

Sanghavi was emphatic that data centres would not be watered by diverting supply meant for farmers or other industry — the answer, he said, is desalination. The policy funds that directly: a captive desalination plant earns additional support of 20% of eligible capital expenditure (excluding land) or ₹2 crore per MLD, whichever is lower, up to 20 MLD for a 1 GW data centre and scaled pro-rata for smaller loads. Round-the-clock water supply is promised right up to the entity's doorstep.

Power, building norms and approvals

On power, the state will facilitate distribution-licence applications to the Gujarat Electricity Regulatory Commission, provide dual, electrically diverse feeders for redundancy, and permit open-access procurement. Building norms are eased too — additional FSI, up to 70% ground coverage, rooftop chillers kept outside FAR (subject to Airports Authority clearance), and multi-level DG stacking. Every investor is promised a senior nodal officer as a single point of contact, and the operation of data centres in Gujarat is classified an "Essential Service."

The fine print

The incentives are not open to everyone. Only projects with an approved installed IT load of 150 MW or above are eligible, and the policy's support applies up to an aggregate target of 7.5 GW across the state. A sustainability condition is written into the incentive itself: at least 51% of the electricity for core data centre operations must be sourced from green and renewable energy.

Source: The Hawk and the Government of Gujarat's Viksit Gujarat — Data Centre Policy 2026-29.