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Saturday, September 19 2026 | 10:41:18 PM
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Green Byte Boom: Karnataka Approves ₹1,300 Cr Sustainable Data Centre Policy 2026–31 to Power India’s AI Future

Saransh Kanaujia
Saransh Kanaujia - Editor
6 Min Read
Engineers inspecting high-performance AI computing servers inside an energy-efficient, green-certified data centre.
Bengaluru. 
In a milestone move designed to balance rapid artificial intelligence (AI) computing growth with strict environmental accountability, the Karnataka State Cabinet—chaired by Chief Minister D.K. Shivakumar in Mangaluru—has formally approved the Karnataka Sustainable Data Centre Policy 2026–31.
Backing the five-year roadmap with a comprehensive ₹1,300.45 crore financial outlay, the policy sets an aggressive goal of achieving 1 GW of cumulative data-centre IT load capacity by 2031. Crucially, the policy aims to capture 10% to 12% of India’s total AI-ready data-centre capacity, establishing the state as a globally competitive hub for high-performance computing (HPC).

Solving the AI Energy-Water Challenge

The explosion of generative AI, cloud computing, 5G networks, and Global Capability Centres (GCCs) across India has fundamentally altered infrastructure needs. AI computing racks consume significantly more power and generate vastly higher thermal outputs than standard cloud workloads, straining electricity grids and local water bodies.
To tackle this, Karnataka is moving away from traditional real-estate-heavy incentives. The new policy links state subsidies and support directly to strict environmental performance metrics:
  • PUE & WUE Tracking: Facilities will be continuously audited for Power Usage Effectiveness (PUE) and Water Usage Effectiveness (WUE).
  • Resource Heat Mapping: Prior to land allocation, the state will map energy, land, and water availability to prevent natural resource depletion.
  • Advanced Cooling Technologies: Direct incentives will be provided for liquid immersion cooling, closed-loop water recycling, and 100% renewable energy integration.

Beyond Bengaluru: Decentralizing the Digital Economy

A key structural pillar of the policy is driving tech investments away from an overburdened Bengaluru into emerging regional digital corridors:
┌─────────────────────────────────────────────────────────────┐
│                 KARNATAKA REGIONAL CORRIDORS                 │
├──────────────────┬──────────────────────────────────────────┤
│ Mangaluru        │ Coastal connectivity & future subsea     │
│                  │ cable landing stations                   │
├──────────────────┼──────────────────────────────────────────┤
│ Mysuru & Tier 2  │ High-performance computing & edge zones  │
├──────────────────┼──────────────────────────────────────────┤
│ Edge Infrastructure│ Hyper-local micro data centres across  │
│                  │ industrial belts & agricultural corridors│
└──────────────────┴──────────────────────────────────────────┘
Mangaluru has been earmarked as a high-value landing destination for subsea fiber-optic cables, reducing latency for global traffic and distributing employment across coastal Karnataka.

Multi-Tier Incentives & MSME Participation

The ₹1,300.45 crore framework incentivizes the entire value chain rather than just large hyper-scaler facilities:
  1. Capital & Power Subsidies: Concessions for project setup, connectivity, and green tariff structures.
  2. Edge Computing: Financial backing for localized, low-latency edge units driving IoT and autonomous tech.
  3. Skill Development & MSMEs: Support for local equipment manufacturers, cooling unit fabricators, and R&D through a proposed Centre of Excellence for Data Centres.
The Department of Electronics, IT, BT, and S&T will oversee execution, with Karnataka Information Technology Services (KITS) as the registration interface and Karnataka Udyoga Mitra (KUM) acting as the single-window clearance portal.

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Frequently Asked Questions (FAQ)

Q1: What is the primary target of Karnataka’s Sustainable Data Centre Policy 2026–31?
The policy aims to achieve 1 GW of cumulative data centre IT load and capture 10–12% of India’s AI-ready data centre capacity by 2031, backed by a ₹1,300.45 crore implementation framework.
Q2: How does the policy address the environmental impact of AI data centres?
It mandates the monitoring of Power Usage Effectiveness (PUE) and Water Usage Effectiveness (WUE), uses resource heat mapping for site selection, and offers financial incentives for renewable energy and advanced cooling technologies.
Q3: Which cities outside Bengaluru are targeted for data centre development?
Coastal cities like Mangaluru are prioritized for subsea cable landing infrastructure, alongside Mysuru and other emerging regional hubs to spread technology sector jobs.
Q4: Which agencies will handle single-window clearances for investors?
Karnataka Information Technology Services (KITS) handles policy registration, while Karnataka Udyoga Mitra (KUM) serves as the single-window agency for project clearances.

Disclaimer

The information provided in this article is for educational and informational purposes based on official policy announcements from the Government of Karnataka. Policy incentives, financial outlays, and eligibility criteria are subject to official guidelines issued by the Department of Electronics, IT, BT, and S&T, Government of Karnataka.

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BySaransh Kanaujia
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Saransh Kanaujia is a journalist and editor associated with Matribhumi Samachar Group, covering Indian national affairs, business and economy, technology, government policies, and other major developments. His work focuses on providing timely news coverage, explainers and updates for readers in India and abroad.

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