State governments in India have been working to incentivise data centre development in their geographies. Tamil Nadu is one state where data centre development is being supported by strong infrastructure and renewable energy. Meanwhile, Himachal Pradesh, with its focus on green data centres, is leveraging its natural cool climate and hydroelectric resources to attract sustainable investments. Both states are making strategic advancements to cater to the country’s growing data and technology needs.
A look at their initiatives in the data centre space…
Tamil Nadu
Tamil Nadu is emerging as a global data centre hub, ranking among the top 10 destinations worldwide, with an installed capacity of 178 MW in data centres and a target of 500 MW over the next five years. Approximately, 30 per cent of India’s subsea cables pass through Tamil Nadu, reinforcing its data-hosting capabilities. With 14-15 data centres already operational and an equal number under development, the state’s infrastructure and reliable power supply attract Indian and international data centre operators.
The state provides competitive power rates for data centres, priced at Rs 7.25 per kWh, second only to Mumbai in affordability. By 2026, Chennai is expected to account for around 27 per cent of the capital expenditure in India’s data centre sector, capturing a share of an anticipated $5.6 billion investment. IT special economic zones spanning over 100,300 acres are being established in Tier II cities such as Coimbatore, Madurai and Hosur, with developments such as the Tidal Neo Park supporting IT and ITeS operations. Companies such as TCS, Honeywell and HCL are already investing across the state’s Tier I and II cities, as new data centre hubs expand beyond Chennai, offering enhanced power infrastructure, land availability, competitive pricing, fibre connectivity and social infrastructure.
Under Tamil Nadu’s Data Centre Policy, 2021, multiple incentives are available to attract data centre investments, including industrial electricity tariffs, a 100 per cent waiver of electricity duty for five years, concessional access charges, dual power grid access and stamp duty concessions. Large investments exceeding Rs 20 billion can benefit from a structured assistance package, with additional incentives for edge data centres. Guidance Tamil Nadu, the state’s investment promotion agency, assists data centre projects from land identification to recruitment, facilitated by a single-window approval system under the Tamil Nadu Business Facilitation Act, 2017.
Tamil Nadu currently hosts two major data centre hubs, with the Sirus area near Chennai as a critical node. Approximately 30 per cent of India’s subsea cables connect here, enabling global connectivity through 264 landing locations worldwide. With over half of Tamil Nadu’s data centres located in Sirus, it has become a high-capacity region, central to the state’s data strategy.
Going forward, Tamil Nadu is developing three additional data centre hubs, backed by a policy framework focused on technical feasibility and power availability. Tailored stamp duty concessions are available across three district categories, with a 50 per cent concession for land from state-owned entities in Tier I districts and private land purchases receiving a 50 per cent back-end subsidy for up to 10 acres upon full investment. In Tier II and III districts, data centres benefit from a full 100 per cent exemption on stamp duty, while Tier III districts offer a 50 per cent subsidy on land cost for government plots, supporting cost-effective expansion.
Local micro, small and medium-sized enterprises (MSMEs) are incentivised to provide site maintenance and operational services for data centres, with reimbursement of up to 10 per cent of costs, capped at Rs 1 million per centre, promoting localised growth. These targeted incentives illustrate Tamil Nadu’s commitment to becoming a data centre-friendly state, meeting the infrastructural needs of global players, while fostering sustainable growth through MSME engagement.
Himachal Pradesh
Himachal Pradesh is making significant strides in establishing itself as a key player in India’s data centre industry, driven by projects and policies aimed at supporting sustainable, green data centre development. At the heart of this initiative is the Himachal Pradesh State Data Centre (HP SDC), a core information and communications technology infrastructure designed to support the state’s e-governance initiatives. Operational since May 2016, HP SDC has been providing secure in-house data storage for various state IT services, with options for hosting on both cloud and co-location models. It operates as a Tier II data centre, boasting an uptime of 99.75 per cent. Currently, HP SDC is home to 218 applications and websites from 70 state departments and organisations, underscoring its pivotal role in the digital ecosystem of Himachal Pradesh. The data centre is International Organization for Standardization (ISO)/International Electrotechnical Commission (IEC) 20000: 2011 and ISO/IEC 27001: 2013 certified, ensuring a high standard of operational excellence. It also benefits from a robust disaster recovery site located in Delhi, in collaboration with Nxtra Data. This disaster recovery site ensures business continuity with a quick recovery time of two hours, enabling the activation of servers at the recovery site if the main centre faces any disruption.
HP SDC’s infrastructure is built on a virtualisation platform, which supports all hosted applications in a virtualised environment. Additionally, several key applications rely on co-located hardware at the centre. These applications include crime and criminal tracking network and systems for the Himachal Pradesh police department, integrated command and control centre for the Shimla Smart City, value added tax functions for the excise and taxation department, National e-Governance Plan in agriculture project under the Himachal Pradesh Agriculture Department, Himachal Pradesh horticulture project for the state horticulture department, enterprise resource planning system for Himachal Pradesh Power Corporation Limited and excise and goods and services tax functions for the Himachal Pradesh excise and taxation department.
In line with its commitment to sustainable technology, the state’s IT/ITeS Policy, 2019 offers several fiscal incentives for green data centres, aiming to stimulate investment in eco-friendly infrastructure. These incentives include a 50 per cent reimbursement for detailed project report costs, capped at Rs 0.01 million post-operations. Lease rental subsidies are also provided, with up to 85 per cent coverage in the first year (up to Rs 2 million), 60 per cent in the second year (up to Rs 1.5 million), and 35 per cent in the third to fifth years (up to Rs 1 million annually). For capital investments, a subsidy covering 50 per cent of the fixed capital investment (excluding land) is available, capped at Rs 20 million. Other benefits include full exemption from stamp duty and registration fees on land transactions, exemption from change in land use fee under the Himachal Pradesh Town and Country Planning Act and a 5 per cent interest subvention on term loans up to Rs 3 million annually for five years. Additionally, the policy offers 100 per cent reimbursement of net state GST for seven years, covering up to 100 per cent of the fixed capital investment. The policy also incentivises environmental protection measures, providing 25 per cent reimbursement on equipment for effluent treatment and rainwater systems (up to
Rs 0.03 million), as well as a 50 per cent power tariff reimbursement for effluent treatment operations, up to Rs 0.01 million per year for four years. Companies can also receive 50 per cent reimbursement for ISO or similar certifications, capped at Rs 0.07 million, along with 50 per cent reimbursement for the transportation of plant and machinery, up to Rs 0.07 million.
The natural advantages of Himachal Pradesh further enhance its appeal as a destination for green data centres. The state’s cool climate reduces cooling costs, while its abundant hydroelectric power provides a sustainable and reliable energy source. The state’s strategic location near major cities also offers data centres easy access to urban centres, while its natural disaster protection ensures operational stability. Further, the state’s pristine landscapes, skilled workforce from reputed educational institutions and its focus on sustainable economic growth make it an ideal hub for green data centres. Through these initiatives, Himachal Pradesh is not only positioning itself as a leader in digital infrastructure but is also paving the way for a green, sustainable future in India’s growing data centre sector. The capacity enhancement of HP SDC, set to be completed by November 2024, includes significant upgrades that will help meet the growing demand for data hosting and management services. These upgrades will expand the server farm area to 2,040 square feet, increase server compute power to 1,936 cores, add 6 TB of RAM, expand storage to 1,024 TB, upgrade the uninterruptible power supply capacity to 360 kVA, add three 400 kVA DG sets, and provide 63 racks of space, all supported by a 1,000 ampere power source. These enhancements will ensure that HP SDC can continue to meet the growing demands of the state’s digital and data storage needs, while reinforcing Himachal Pradesh’s position as a key player in the country’s digital future.
Based on presentations by Gowtham Daas, State Head, Guidance Tamil Nadu; and Alok Tomar, State Head, SEMT, Government of Himachal Pradesh