MeitY draft data centre policy 2020 focusses on infra tag, incentives to tap into $4.9 bn opportunity

MeitY draft data centre policy 2020 focusses on infra tag, incentives to tap into $4.9 bn opportunity
Photo Credit: 123RF.com
9 Nov, 2020

In what is seen as a critical move to boost the information technology (IT) sector in India, the ministry of electronics and information technology (MeitY) has proposed to designate data centres as infrastructure and to group centres under the essential services category among other measures. 

What is it?

According to MeitY, the data centre infrastructure market in the country has a growth potential worth $4.9 billion by 2025.  

The Draft Data Centre Policy of 2020, released on Friday, seeks to address some of the challenges faced by the sector in order to become a global data centre hub. 

Infrastructure status

The infrastructure status will help the sector avail long-term credit among international and domestic lenders, which in turn will encourage investments. 

The essential services tag, given under the Essential Services Maintenance Act, 1968 (ESMA), will help the sector to continue functioning during instances of crisis or calamities. 

Ease of conducting business  

The draft policy has also proposed to simplify clearances to set up data centres in the country. MeitY stressed that it would also promote Indian data centres globally through its worldwide inter-government initiatives and memorandum-of-understanding (MoU). 

Clean, cost-effective electricity 

The policy notes the need for clean and uninterrupted power supply to the data centres. It also encourages the use of renewable energy – solar or wind based power – by collaborating with the Ministry of Power on their various  green and sustainable energy initiatives. 


MeitY said it would work with the Department of Telecommunications (DoT) to facilitate robust  and cost-effective connectivity backhaul. 

Local manufacturing

The policy proposes to encourage use of indigenous hardware (IT as well as non-IT  equipment) and software products used in the data centres, in an effort to reduce the overall import burden of the country. 

Land parcels and other incentives 

“States shall be encouraged to demarcate specific zones (land parcels) for setting up data centre parks with necessary infrastructure like road connectivity, availability of water and other essential infrastructure items,” the policy said. 

The report also said that the central and state governments should formulate their respective schemes and guidelines to detail out fiscal and non-fiscal incentives in the sector for further expansion of data centres. The government would also formulate a Data Centre Incentivization scheme for the promotion of the data centres. 

To create an ecosystem pivoted towards hyperscale data centres, IT companies, research and development units and cloud service providers, the policy also proposed setting up of at least four “data centre economic zones(DCEZ)’ in India, which would be implemented through inviting proposals from the respective states.