The National Institution for Transforming India (NITI Aayog) has released a Data Centre Evaluation Framework on 14 October 2026 to guide state governments in planning and facilitating data centre investments. The framework, developed with inputs from the Ministry of Electronics and Information Technology, Ministry of Power, and the Department for Promotion of Industry and Internal Trade, provides state governments with a structured tool to evaluate investment proposals and ensure sustainable growth in this sector.
India’s data centre capacity has grown significantly from about 375 MW in 2020 to approximately 1.5 GW currently, driven by rising demand for artificial intelligence, cloud computing and data-intensive applications. As the sector expands, state governments need to balance the opportunity to attract investment with the need to ensure adequate electricity, water, land and connectivity to support such infrastructure long term.
Key facts
- Framework released on 14 October 2026
- Developed by NITI Aayog’s Frontier Tech Hub with inputs from MeitY, Ministry of Power and DPIIT
- India’s data centre capacity grew from 375 MW (2020) to 1.5 GW (current)
- Central government offers tax holiday until 2047 for eligible foreign cloud service providers using India-based data centre infrastructure
- Framework built around five pillars: Power and Energy, Water and Cooling, Siting and Environmental Sustainability, Economic and Strategic Value, and Policy, Governance and Implementation
What the framework covers
The framework serves as a decision-support tool rather than a new regulatory layer. It helps states assess whether they have the necessary infrastructure and resources to support proposed data centre projects before approving them.
On power and energy, the framework recommends that states evaluate grid readiness and net electricity draw from proposed facilities. It also encourages promotion of renewable energy and energy storage systems to reduce dependence on conventional power sources.
For water management, a major concern given India’s water stress in many regions, the framework suggests states assess basin-level water availability and the impact of data centres on public water supplies. It recommends rainwater harvesting, on-site treatment and storage, and clear lifecycle plans for managing electronic waste, batteries and other hazardous materials generated by data centres.
The framework emphasises identifying suitable zones for data centres within each state, distinguishing between different types of facilities (colocation services versus active compute services), and linking state-level incentives to measurable outcomes rather than unconditional support. It also promotes domestic manufacturing of data centre infrastructure under Make in India principles.
Implementation support includes time-bound project approvals, clear accountability mechanisms and monitoring of whether facilities meet their stated commitments on employment, investment and infrastructure development.
Why states need this framework
According to NITI Aayog officials, the purpose of the framework is to help states move beyond simply attracting data centre investments to building “investment-ready” infrastructure. This means states should first ensure they have adequate power, water and connectivity before committing public resources or incentives to data centre projects.
By identifying potential constraints early, the framework seeks to reduce implementation delays, lower project risks, and ensure that data centre investments generate lasting economic and technological benefits for the state. It also protects critical resources like water and electricity from being depleted by large-scale data centre operations, particularly in water-stressed regions.
What this means for you
For citizens in states where data centres are proposed or planned, the framework means project approvals should be based on demonstrated infrastructure capacity rather than political considerations. This reduces the risk of stranded projects or infrastructure failures.
If you work in technology, manufacturing or infrastructure sectors, the framework’s emphasis on Make in India principles in data centre supply chains could create local job opportunities. States following the framework will prioritise sourcing infrastructure components domestically.
For environmental concerns, the framework’s focus on renewable energy, water conservation and waste management means data centre expansion should be planned with ecological sustainability in mind, particularly important in water-scarce regions.
What happens next
The framework has been released for use by state governments. States can access it to begin evaluating pending or proposed data centre investments against its criteria. The framework is intended to facilitate faster and more predictable project execution by clarifying expectations upfront rather than creating delays through ad-hoc approvals.