Indian states are intensifying efforts to attract artificial intelligence (AI) data centre investments, with a series of new policies and project announcements signalling that AI infrastructure development is expanding beyond the country's established hubs.
Over the past few weeks, Gujarat and Uttar Pradesh have unveiled new data centre policies with a combined investment target of more than Rs 8 lakh crore, while Andhra Pradesh has announced fresh AI data centre projects around Visakhapatnam. Odisha has also entered the race after HCLTech announced plans to set up the state's first AI data centre.
As demand for AI computing infrastructure rises, states are competing by offering incentives such as subsidised land, electricity support, tax benefits and faster regulatory clearances. AI data centres require significantly larger clusters of graphics processing units (GPUs), higher power availability and advanced cooling systems compared with conventional data centres.
Gujarat last week launched the Viksit Gujarat Data Centre Policy 2026-29, targeting investments of Rs 6 lakh crore and 7.5 GW of data centre capacity over the next three years. The policy covers hyperscale data centres, AI infrastructure and cloud service providers, and offers capital assistance, interest subsidies, power tariff support, tax incentives and regulatory concessions. It also mandates that at least 51% of electricity used for core operations be sourced from renewable energy.
Uttar Pradesh has approved its Data Centre Policy 2026, replacing the previous policy that expired earlier this year. The state aims to attract investments exceeding Rs 2 lakh crore and create more than 2 GW of data centre capacity. The policy also includes provisions to promote GPU-based infrastructure and facilities designed specifically for AI workloads.
While Gujarat and Uttar Pradesh are relying on fresh policy frameworks, Andhra Pradesh and Odisha are driving growth through company-backed investments.
Andhra Pradesh is positioning Visakhapatnam as a major AI data centre hub, targeting more than 6 GW of AI data centre capacity by 2030. According to the state government, projects worth over Rs 6 lakh crore are planned or under development. Companies including Google, Reliance Industries and Sify Technologies have announced projects and initiated early-stage work in and around the city. State officials attribute the growing interest to Visakhapatnam's submarine cable connectivity, along with reliable access to power and water.
Odisha has also made its entry into the sector, with HCLTech announcing a Rs 14,257-crore investment to establish an AI data centre at the Odisha Sovereign AI Park in partnership with AI startup Sarvam and the state government. The project will also include a 5,000-seat technology centre in Bhubaneswar.
Despite the growing interest from newer states, Maharashtra and Tamil Nadu continue to dominate India's operational data centre landscape, with Mumbai and Chennai remaining the country's largest markets owing to their mature digital infrastructure and international submarine cable landing stations.
The latest policy initiatives and project commitments indicate that competition among states to attract AI infrastructure investments is gathering pace, even as the country's operational data centre capacity remains concentrated in a handful of established locations.
