BENGALURU: Karnataka is preparing to attract ai-driven investments with a new policy offering efficiency-linked incentives aimed at attracting environmentally conscious global tech firms.
The state plans to roll out what officials describe as India’s first dedicated Sustainable Data Centre Policy, aimed at supporting environmental compliance goals while reducing the sector’s resource footprint, according IT/BT Minister Priyank Kharge. The policy targets 1 GW of data centre capacity and a 10-12% share of India’s AI-ready data centre market by 2031. The state has proposed an outlay of Rs 1,300.45 crore to fund incentives across investments, green energy adoption, workforce skilling, R&D, connectivity, and local manufacturing, with subsidies tied to power and water efficiency benchmarks.
The framework is looking at these issues first as designated ‘sustainable data centre sones’, second as dedicated centre of excellence for the sector, third a resource heat-mapping to guide site selection based on power and water availability, fourth support for edge data centres, cable landing stations, and AI/quantum-ready infrastructure and also is looking at new investment corridors beyond Bengaluru. The policy comes as India’s data centre sector faces scrutiny over energy and water use. By tying incentives to efficiency, Karnataka aims to differentiate itself from hubs like Mumbai and Chennai, which face concerns over power grids and groundwater.
The Beyond Bengaluru framing also signals an attempt to decentralise investment away from the already-congested capital.
Prof R S Deshpande, former director of ISEC and a well-known economist, raised concerns over the state government’s capacity to execute the plan. He questioned whether Karnataka has adequate resource persons for such a project in the state government sector, noting that siting facilities in districts like Tumakuru, where energy and water already face competing demands, could prove challenging.