State Cabinet clears Data Centre Policy

It offers many concessions for setting up data centres outside Bengaluru urban district

April 18, 2022 09:30 pm | Updated 09:30 pm IST - Bengaluru

The State Cabinet on Monday approved the Karnataka Data Centre Policy 2022 with a focus on creating demand and value for data centres, by providing a robust and well-connected ecosystem for the growth of data centres in the State.

The policy offered many concessions including capital subsidy, 100% exemption of land conversion fees, exemption of stamp duty, concessional registration charges, power tariff concession, green power tariff reimbursement, and exemption from electricity duty. The policy has a vision “to position Karnataka as the destination of choice for futuristic data centres in the country and to make Karnataka an integral part of the global data centre ecosystem and digital supply chain”.

The policy aims at attracting domestic and foreign investments of around ₹10,000 crore, to develop more than 200 MW capacity Data Centre Industry in Karnataka by 2025, Law and Parliamentary Affairs J.C. Madhuswamy and IT/BT Minister C.N. Ashwath Narayan said.

Data centre units shall be eligible to get one-time 7% capital subsidy up to ₹10 crore on Value of Fixed Assets excluding land and building, whichever is less, outside Bengaluru Urban district. The same should be disbursed within five years with an annual ceiling of ₹2 crore. The policy envisages 10% land subsidy on purchase/lease of land outside Bengaluru Urban district. Cap on the maximum amount of land subsidy should be limited to 10% of the total land cost or ₹3 crore, whichever is less.

It would also provide 100% exemption from stamp duty, up to 10 acres, for data centres outside Bengaluru Urban district. It would also provide 100% exemption of land conversion fees for converting the land from agriculture use to industrial for data centres outside Bengaluru Urban district.

A special package of incentives would be considered for projects of strategic importance, where the standard package would be customised for investments greater than ₹4,000 crore on case-to-case basis.

The policy has special focus on promoting data centres outside Bengaluru Urban district to create ecosystem for an inclusive and sustainable development trajectory in the State. Karnataka has potential to position itself as one of the leading destinations for the Data Centre industry in the country with a data centre capacity of 96 MW which accounts for 15% of India’s data centre capacity.  Bengaluru currently features among the top five leading destinations for the Data Centre Industry in the country, said an official release.

Data centres are growing in the State by creating economic opportunities and significant trickle-down effects, in supporting economic activity in allied industries/services such as backward linkages with real estate sector, IT and electrical hardware, power sector, which is expected to drive growth in terms of capacity expansion and jobs.

The State is currently home to eight data centre players including Reliance, Siffy, NTT, Next Gen, Trimax, Airtel, STT, and ESDS. The Department of Industries and Commerce of the State has signed MoUs with key industry players and received investment proposals of total approximate value of over ₹10,000 crore.  Around 10 new data centre units are estimated to be set up with an investment of over ₹10,000 crore in the State with data centre capacity of over 170 MW in the next five years (policy period).

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