Karnataka approves Sustainable Data Centre Policy (2026–31) with ₹1,300.45 crore budget

Policy 2026–31 and allocated a budget framework of ₹1,300.45 crore to implement it over the five years. The stated aim is to develop Karnataka into a sustainable data‑centre hub while supporting growth in AI, cloud computing, IoT, 5G and big data.

The policy sets concrete targets: Karnataka should account for 10–12% of India's AI‑ready data‑centre ecosystem by 2031 and build up to 1 gigawatt of data‑centre capacity within the state. Those targets frame the scale of the incentive and capacity push the government plans to make.

The policy focuses on environmental and resource concerns central to modern data centres. Key elements called out are:

• improving electricity and water efficiency,
• supporting renewable energy and green technologies,
• aiming to reduce carbon emissions associated with data‑centre operations.

The Cabinet decided to raise allocations for several incentive streams under the policy. The increased items include capital subsidies, reimbursement of wheeling charges, demand‑centre incentives and research‑and‑development support. Those adjustments form part of the total ₹1,300.45 crore framework.

Geographic strategy: look beyond Bengaluru

Officials identified Mangaluru as a focal location for expansion. Reasons given include coastal connectivity, future submarine cable landing possibilities and other advantages suited to data‑centre growth. The government wants to decentralize the state's data‑centre ecosystem beyond Bengaluru and leverage the coast for improved connectivity.

Implementation window and administration

• For data‑centre developers: clearer financial incentives and a state commitment to energy and water efficiency can reduce operating and capital risk for sustainable projects.
• For utilities and grid planners: targets that include renewables and efficiency will require coordination on power supply, wheeling arrangements and potentially on‑site or nearby renewable generation.
• For coastal communities and city planners: Mangaluru's selection signals future infrastructure projects and requires planning around cable landings, land use and environmental management.

Immediate next steps implied by the announcement

Karnataka has allocated a dedicated budget for a five‑year, sustainability‑oriented push to expand data‑centre capacity, with specific capacity and market‑share targets and an emphasis on energy, water and carbon outcomes. The policy also shifts focus to coastal locations like Mangaluru to broaden the state's data‑centre footprint.