The NITI Frontier Tech Hub has developed a data centre evaluation framework to help Indian states assess proposed data centre projects, based on power and water availability, infrastructure readiness, governance and economic value before granting approvals.
The framework recommends minimum documentation requirements, resource assessments and measurable performance commitments to ensure that faster clearances are supported by infrastructure readiness and sustainable outcomes.
It aims to shift competition among states from attracting investment announcements to demonstrating investment readiness, infrastructure quality, and measurable economic benefits. It is designed to support state-level decision-making rather than prescribe a uniform approval process or introduce additional regulation.
For power readiness, states should validate a Power Readiness and Ramp-up Plan prepared jointly with the developer, DISCOM, and State Transmission Utility, and obtain load-flow studies for total planned load.
Facilities are to be classified as conventional colocation (renting physical space in a third-party, multi-tenant data center to house your own servers and hardware), ‘AI/HPC/GPU’ compute, or hybrid. States should set efficiency requirements such as design and operating power usage effectiveness.
For water management, states should prepare a 20 to 30 year seasonal catchment water balance. Where basin stress precludes additional freshwater abstraction, desalinated water may be required.
States should designate data-centre-ready zones, mark exclusion or high-risk zones and require a Community Impact Assessment before construction. They should also provide for waste and decommissioning liabilities, including financial assurance where warranted.
To assess economic value, states should measure net economic contribution, including domestic procurement, skilling and local hiring, and pay only for measurable outcomes. Incentives should be linked to KPIs within the recipient’s control, with reporting frequency and suspension triggers. The framework says this can cover domestic industry participation, skills, innovation and sustainable resource use.
The governance pillar calls for a time-bound digital single-window mechanism, a published state-wise data centre approval matrix and a designated nodal authority in each state. The central government would supply a national legal-responsibility matrix and a centralised audit mechanism, with MeitY as the nodal ministry.
The framework’s key implication is that guidelines should be in place before constraints emerge, and that faster approvals should come only where resource readiness, local safeguards and public value are evidenced.