Gujarat just did something no other Indian state has: it didn’t just announce incentives for data centres, it announced a city for them. On July 9, 2026, Chief Minister Bhupendra Patel, flanked by Deputy CM Harsh Sanghavi and Science and Technology Minister Arjun Modhwadia, launched the Viksit Gujarat Data Center Policy 2026-29 at Gandhinagar’s Mahatma Mandir — and within it, a plan to turn Dholera into what state officials are openly calling the “world’s largest Data Centre City.”
The headline numbers are big even by the standards of India’s increasingly crowded state-level data centre race: a 7.5 GW capacity target, ₹6 lakh crore (roughly $72 billion) in expected first-phase investment, and — notably — demand from investors that has already come in at nearly double the policy’s planned capacity before the policy is even a day old. Fourteen companies, including hyperscalers and firms partnering with global technology giants, have reportedly already submitted proposals.
Why Gujarat, and Why Now
The timing isn’t incidental. Gujarat’s policy launch comes just months after the Union Budget introduced a 20-year tax holiday for global data centre infrastructure providers — a move CM Patel directly credited as a catalyst — and follows a wave of other states (Uttar Pradesh, among others) rolling out their own dedicated data centre policies in 2026. What makes Gujarat’s entry distinct is less the incentive package itself and more the specificity of its infrastructure bet: rather than spreading capacity across multiple cities, the state is concentrating its ambitions on a single, purpose-built location.
Gujarat’s underlying pitch rests on assets it already has in place. According to IBEF, the state currently has 69 GW of installed power capacity, of which 47 GW — roughly 68% — comes from renewable sources. That existing renewable base is precisely why Gujarat can credibly mandate what it’s mandating: 51% of all electricity consumed by data centres under this policy must come from green energy, one of the more aggressive renewable mandates attached to any Indian state’s data centre policy to date. On water — the other resource-intensive requirement of large data centres — Gujarat is leaning on its long coastline, with Deputy CM Sanghavi confirming that water supply will come through desalination plants converting seawater, explicitly to avoid diverting water earmarked for farmers or industry.
The Incentive Package, Decoded
Strip away the ceremony, and the policy’s actual mechanics are fairly aggressive:
- 2.5% capital subsidy for eligible projects in the Dholera region
- Up to 4% interest subsidy for 10 years
- ₹1-per-unit power tariff subsidy for 20 years
- 100% exemption from stamp duty and registration fees
- Reimbursement of electricity duty for 20 years
- Reimbursement of eligible SGST on both investment and operations
- Additional Floor Space Index (FSI), relaxed building norms, rooftop utility permissions, dual power supply, open access for electricity procurement, 24×7 water supply, single-window clearances, and sub-leasing of land without additional charges
There’s a floor, though: only projects with a minimum approved IT load of 150 MW qualify for these incentives — a threshold clearly designed to attract hyperscale players rather than smaller colocation operators, reinforcing that Gujarat is chasing scale, not volume of participants.
The Dholera Bet
Dholera is where the policy’s ambition gets concrete. Originally conceived as a greenfield industrial smart city and more recently positioned as India’s semiconductor hub (Deputy CM Sanghavi pointed to more than three Semiconductor OSAT plants inaugurated there within four months of the 2021 Semiconductor Mission launch), Dholera is now being layered with a second identity: data centre capital. The state is targeting a 7-8 GW data centre cluster in Dholera alone, backed by infrastructure already in motion — a new airport nearing operational status and a planned semi-high-speed rail link connecting Dholera to Ahmedabad. The government is also positioning Dholera as a hub for Global Capability Centres (GCCs), layering white-collar enterprise operations on top of the raw data infrastructure play.
How Big Is This, Really? The Global Context Gujarat’s Own Minister Offered
Perhaps the most striking numbers in the entire launch event came from Science and Technology Minister Arjun Modhwadia himself, who used the moment to frame just how far behind India remains globally. According to Modhwadia, the United States has around 5,500 data centres and the United Kingdom has more than 500, while India currently has only about 200. On capacity, the gap is even starker: India’s current data centre capacity sits at just 2-3 GW, compared to roughly 30 GW in the United States — and even accounting for every upcoming project nationally, Modhwadia said India is unlikely to cross 5 GW in the near term.
That framing matters, because it puts Gujarat’s own 7.5 GW target in perspective: the state alone is targeting more data centre capacity than Modhwadia estimates all of India might realistically reach in the near term from currently visible projects nationally — a claim that signals either extraordinary confidence in Gujarat’s ability to outpace the rest of the country, or a genuinely transformative shift in how fast India’s data centre sector is now expected to scale.
What Could Slow This Down
Ambitious capacity targets and generous subsidies are one thing; execution is another. India’s broader infrastructure record — including transmission project delays flagged by rating agencies like ICRA, where a majority of centrally awarded transmission projects have missed their scheduled commissioning dates by anywhere from two months to three years — is a reminder that policy launches and physical delivery are two very different milestones. Gujarat’s own officials seem aware of this: the state has committed to organizing stakeholder consultation meetings, appointing senior nodal officers for handholding support, and pre-identifying land pockets in Dholera specifically to avoid the bureaucratic delays that have slowed similar mega-projects elsewhere in India.
Chief Secretary Manoj Kumar Das called the policy a “game changer,” and pointed out that the scale of investment being targeted would, per World Bank classification standards, help push Gujarat’s economic profile further toward high-middle-income status. Whether that materializes depends less on the policy document itself and more on whether Gujarat can convert 14 investor proposals and near-double-target demand into gigawatts that are actually energized, cooled, and running.
The Bottom Line
Gujarat isn’t just competing with Uttar Pradesh, Tamil Nadu, or Maharashtra for a slice of India’s data centre investment wave — it’s making a distinct bet that a single, purpose-built city, backed by an unusually aggressive renewable energy mandate and a genuinely large incentive package, can leapfrog the incremental, multi-city approach other states are taking. With investor demand already outstripping the policy’s own targets before implementation has even begun, Gujarat has cleared the easiest hurdle — generating interest. The next three years will determine whether Dholera actually becomes the “world’s largest Data Centre City,” or simply the most ambitious data centre policy announcement in a year that’s already had no shortage of them.
Reporting based on the official Gujarat government policy launch (July 9, 2026), with additional context from, IBEF, and prior ICRA transmission sector analysis.
Can Google and Meta Really Claim ‘AI for Climate’ While Their Own Emissions Soar?
Ruchi Kumar is the associate editor at Entrepreneur News Network and TVW News India, where she leads editorial strategy, brand storytelling, and startup ecosystem coverage. With a strong focus on innovation, business, and marketing insights, he curates impactful narratives that spotlight India’s evolving entrepreneurial landscape. She has written extensively on fintech, AI and emerging startups.