Before diving into artificial intelligence, every country must first solve a more fundamental challenge. AI does not run on ambition alone. It runs on compute, power, connectivity and digital infrastructure. As nations compete to build sovereign AI capabilities and attract global technology investments, the race is increasingly shifting from developing AI applications to building the infrastructure that powers them.
Acknowledging this new trend, the Government of Gujarat has introduced the Viksit Gujarat Data Centre Policy 2026-29 and thus emerged as a frontrunner for hyperscale data centres, cloud ecosystems and AI-based investments.
Viksit Gujarat Data Centre Policy 2026-29 is one of the most ambitious state level policies aimed at development of AI-ready digital infrastructure in India. Under this policy, there are plans for investment of Rs 6 lakh crore and generation of up to 7.5 GW of data centre capacities, which happens to be the largest ever proposed by any state in the country. Various fiscal and non-fiscal incentives have been provided including waivers on stamp duty and registration fee, full 20-year exemption of electricity duty, Rs 1 per unit power subsidy for 20 years, relaxation on FSI and building standards, along with funding for captive desalination plants to meet water needs.
Constructing the Digital Infrastructure for AI
With India accounting for roughly 20% of all the data generated in the world, but just a small portion of global data centre capacity, the need for building compute capabilities in the country is increasingly becoming essential for its digital dreams, with projects like the IndiaAI Mission bringing more focus on sovereign AI and digital capabilities.
Pinkesh Kotecha, Chairman and Managing Director of Ishan Technologies mentions, "Gujarat's Data Centre Policy reflects the scale of ambition needed if India wants to become a serious AI infrastructure destination. The state's target of developing up to 8 GW of data centre capacity, backed by capital incentives, power support, SGST reimbursements and new cable landing stations, signals a long-term commitment to attracting hyperscale and AI investments.”
He added, “The next opportunity will be execution. Faster approvals, reliable power, stronger fibre connectivity, and a skilled workforce will determine whether these measures translate into sustained growth.”
Thus, execution will be the key to translating policy ambition into long-term growth.
Building the Enterprise Ecosystem
While data centres are the most visible outcome of the policy, their economic impact extends well beyond server racks and computing capacity.
The operations of hyperscale’s, cloud facilities and GCCs, the need for Grade-A office space and enterprise-level business infrastructure is likely to grow.
Speaking about Gujarat's inherent strengths, Umesh Uttamchandani, the Managing Director of Dev Accelerator Limited, says, "Positioned as a premier global hub for next-generation technology through the ambitious Viksit Gujarat Data Center Policy 2026-29. Mega clusters like Dholera and GIFT City provide the ideal plug-and-play foundation. This infrastructure, thus, positions the state to comfortably capture capital-intensive global AI and cloud computing workloads."
The ripple effects extend further into logistics, fibre networks, equipment manufacturing, facility management, construction, professional services and specialised talent development, creating an ecosystem that supports long-term economic growth rather than isolated infrastructure investments.
Infrastructure That Creates Cities Historically, every major infrastructure investment has reshaped the geography of economic growth. The AI economy is likely to follow a similar trajectory, with digital infrastructure emerging as the foundation of tomorrow's knowledge cities. As investments in AI infrastructure increase, so too will the need for integrated urban development. Technology professionals require quality housing, commercial districts, educational institutions, healthcare, hospitality, mobility infrastructure and vibrant social ecosystems. Shekhar Patel, Managing Director & CEO, Ganesh Housing Limited and National President of CREDAI, says that the policy is a landmark move for the state in terms of its growth as a technology-led investment destination.
He highlighted, “Gujarat's Data Centre Policy is a landmark step in the state's evolution as a leading destination for digital infrastructure, artificial intelligence, cloud computing and technology-led investment. The Data Centre Policy can serve as a catalyst for the next generation of knowledge-led cities, where digital infrastructure, real estate, employment and quality of life evolve together."
A Chance to Influence India’s AI Economy
The latest policy is not only a project for enhancing the capabilities of Gujarat with regards to data centres. It is also symbolic of how states are increasingly seeing digital infrastructure as being a strategic economic resource amid the competition among them in attracting AI infrastructure investments. The policy implementation can make Gujarat a front-runner in terms of AI and cloud infrastructure development.
