According to persons with knowledge of the situation, the government plans to bring back the 2020 data center policy draft and give it some better incentives to suit the industry’s current requirements.
According to one source, who wished to remain anonymous, the incentives include giving data centers infrastructure status comparable to that of other industries, such as ports, railroads, energy, and highways.
One other source claims that the Ministry of Electronics and Information Technology (MeitY) might also provide corporations with further incentives to establish advanced machine learning (ML) and artificial intelligence (AI) data centers, which need more expansive and integrated setups at one site.
“The current cumulative capacity of all data centers in India is roughly 950 megawatts (MW), and there is an opportunity to double this in the next two-three years. We estimate that the investment opportunity in data centers is likely to touch roughly $6 billion to $7 billion by 2026,” said a government official.
The new regulation is expected to encourage states to create designated zones where data center parks can be built in order to assist businesses in managing electricity costs, capital costs, and operating expenses. One source stated that based on the type of data processing being done at these locations, these zones are probably going to receive some tax benefits.
“We will also start talking to the power ministry on the options for uninterrupted power supply and whether these data centers can be allowed to draw power from other states or the open market instead of the state or union territory they are domiciled in,” said a senior government official. “One option is to incentivize the states or the data center parks themselves to set up captive power generation units.”
In 2020, the MeitY published a draft of the Data Center Policy, in which it suggested giving prospective data center firms wishing to establish operations in the nation streamlined single-window permissions. The draft, which was made available for public comment, also suggested giving businesses more incentives to use locally produced servers, storage, and networking technology.
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