Two states have now written data centre policies. Here is what they are actually buying

Two Indian states have now put data centres at the centre of their industrial policy, and the documents read differently only at the edges. Gujarat unveiled its first Data Centre Policy on July 9, covering 2026 to 2029, with a headline target of ₹6 lakh crore of investment and 7.5 gigawatts of capacity. Uttar Pradesh has approved a successor policy aimed at ₹2 lakh crore and 2 gigawatts.

The scale difference is about appetite, not about sector maturity. A 7.5 GW target is roughly three and a half times Uttar Pradesh's, in a state that already hosts the country's largest private data-centre cluster. Uttar Pradesh is starting later and sizing its ambition to what it can plausibly land.

What is on offer

• Gujarat (2026-29): capital subsidy, interest subsidy, power tariff support, SGST reimbursement, stamp duty and registration charge exemptions, and financial assistance for captive desalination plants.
• Uttar Pradesh (2026): incentives directed at GPU-based and energy-efficient facilities, with enhanced provisions for investment outside the most developed districts.
• Both policies frame the demand as AI and high-performance computing rather than general-purpose hosting.

The line in the Gujarat package that most distinguishes it from a standard subsidy sheet is the assistance for captive desalination. Data centres need cooling water in volumes that municipal systems in a dry state struggle to supply, and a policy that helps a developer build its own desalination plant is a policy addressing a physical limit rather than relocating a tax liability.

Uttar Pradesh's emphasis on GPU-based facilities is the more specific bet. AI training and inference demand is what the additional capacity is being planned around, and a facility built for that workload differs from a conventional hosting facility in power density, cooling design and interconnect requirements. The 2026 policy replaced the state's 2021 framework, which had expired earlier in the year.

Both policies also land inside a national carbon market framework that is being extended sector by sector. Any new capacity built under these incentives will be operating in a market with an emissions-intensity obligation on comparable industrial emitters, which raises the value of power purchase agreements from additional renewable sources. Neither policy text makes that the headline, but it is the part of the calculation a developer has to run before signing.