NITI Aayog is encouraging states to assess electricity supply, water availability, land suitability and economic returns before approving data centre projects under a new data centre framework.
The framework intends to help states plan data centre development around available resources while ensuring that public incentives deliver measurable benefits.
Titled Data Centre Evaluation Framework to Help States Plan for Sustainable Growth, the document sets out five pillars for evaluating projects, covering power and energy, water and cooling, site selection and environmental sustainability, economic and strategic value, and policy and implementation.
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Five Pillars to Guide Data Centre Project Assessment
The data centre assessment framework asks states to examine whether existing electricity grids can support a project’s requirements, including future expansion and necessary grid upgrades.
Water availability is another priority. States are advised to consider long-term supplies while also accounting for existing users, including households and farmers.
The framework recommends preparing a seasonal water balance covering surface water and groundwater across a 20-30-year period.
For land selection, NITI Aayog proposes designating data-centre-ready zones. States should verify land ownership, permitted land use, zoning requirements and scope for future expansion. Prioritise locations with strong renewable energy availability, connectivity, and pre-assessed grid and water readiness.
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Link Government Incentives to Measurable Outcomes
The framework also calls for states to assess the net economic contribution of proposed data centres against the public support offered to developers.
This assessment should include incentives related to land, infrastructure and electricity. Rather than offering support without clear performance measures, states are encouraged to link incentives to outcomes such as project commissioning, renewable energy use and local procurement.
These measures would help governments evaluate projects against their economic contribution and resource requirements before committing public support.
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Faster Approvals Through a Single-Window System
NITI Aayog has also called for a time-bound digital single-window mechanism for project approvals. States should publish an approval matrix identifying the required clearances, responsible authorities, processing timelines,s and applicable fees.
The proposed measures combine resource planning, economic assessment and administrative transparency within a common approach to evaluating data centre investments.
For India’s data centre sector, the framework focuses on more than land acquisition and investment announcements. How states assess power, water, access to renewable energy, and returns from public incentives will shape project planning and approval.
Samarjit Kaur is a journalist and communications professional covering technology & emerging digital trends. With a focus on clarity and context, she reports on developments shaping industries and governance. When not reporting, she chooses to plug-in and relax on her playlists and plan her next bucket-list trips!
