Chief Minister rolls out Data Centre Policy

Incentives to projects with over ₹500-cr. investment, which meet 30% energy requirement with renewable sources

November 26, 2021 11:36 pm | Updated 11:36 pm IST - CHENNAI

Providing incentives:  Chief Minister M.K. Stalin releasing the policy at an event in Chennai on Friday.

Providing incentives: Chief Minister M.K. Stalin releasing the policy at an event in Chennai on Friday.

The Tamil Nadu Government has come out with a Data Centre Policy, in which it has doled out incentives to projects with an investment of over ₹500 crore and those that meet at least 30% of their energy requirement with renewable energy sources.

The policy will be applicable to data centres incorporated from April 1, 2021, to March 31, 2026.

The policy, released by Chief Minister M.K. Stalin at the 20th edition of CII Connect 2021, says that data centre units/parks can purchase power from the Tamil Nadu Generation and Distribution Corporation (Tangedco), at prevailing industrial tariff, as per the norms of the governing Tamil Nadu Electricity Regulatory Commission (TNERC). They are eligible for 100% subsidy of tax on power purchased from Tangedco or generated and consumed from captive sources for five years from the date of commencement of commercial operation.

As per the latest tariff order, the State Government charges 60% of the conventional cross-subsidy charge for wind energy and 70% of the conventional charge for solar energy for third-party open access consumers. The government has now said that the same shall be extended to data centre units and parks. Units with a sanctioned load of 50 MW or more shall be provided dual power (two different grids from two different locations/providers).

“The policy addresses critical factors of considerations such as power connections, multi-level stacking of generators and car parking provisions, among other things, along with single-window clearances and stamp duty concessions. The policy also promotes investments in tier-2 and tier-3 cities and green building data centers with incentives,” Jerry Kingsley, senior director, capital markets and data centre advisory, Jones Lang LaSalle (JLL), said.

In terms of stamp duty, if a firm wants to set up a centre in A and B-category districts, 50% concession will be given for the purchase/lease of land obtained from Electronics Corporation of Tamil Nadu Limited (ELCOT)/SIDCO/SIPCOT. In the case of C-category districts, 100% stamp duty exemption will be given. In category-C districts, data centres/parks can avail a 50% subsidy on land cost from ELCOT/SIPCOT/SIDCO. On private lands procured for data centres/parks, 50% subsidy on the cost of land, as per the guideline value, shall be given up to an extent of 10 acres, and subject to land cost not exceeding 20% of EFA (eligible fixed assets) and a cap of ₹2 crore, and with at least 70% of land being used for data centre operations.

Data centre developers will also be encouraged to set up centres within IT Special Economic Zones (SEZs), developed by ELCOT. ELCOT will work with the ICT Academy to design and conduct courses specific to data centre operations.

The State Government has signed MoUs for an investment of over ₹18,000 crore in data centres during the financial year 2020-21. Earlier this week, the Chief Minister signed six new deals in the data centre space.

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