The Karnataka Cabinet, led by Chief Minister D.K. Shivakumar, approved the Sustainable Data Centre Policy 2026-31 on September 18, 2026, at a cabinet meeting held in Mangaluru. The five-year policy sets a target of 1 gigawatt (GW) of cumulative data centre IT capacity by 2031, backed by a budget outlay of ₹1,300.45 crore.
What exactly is a data centre, and why does it matter?
In simple terms, a data centre is a large, specially built facility full of computer servers that store, process, and deliver data — everything from your WhatsApp messages and bank transactions to the AI tools you use every day. Every time you stream a video, use Google Maps, or ask an AI chatbot a question, a data centre somewhere is doing the heavy computing work behind the scenes.
As artificial intelligence tools become part of everyday life, the demand for this kind of computing infrastructure is exploding — and countries and states are now competing to host it, much like they once competed for factories.
Why Karnataka wants this
Karnataka is aiming to capture 10-12% of India’s AI-ready data centre capacity by 2031. IT/BT Minister Priyank Kharge said the goal isn’t simply to add more capacity, but to build “the right capacity, in the right locations, with the right infrastructure” — meaning more renewable energy use, newer cooling technology, better water management, and stronger internet connectivity.
The policy covers the full ecosystem: individual data centre units, larger data centre parks, operators, edge data centres (smaller, localized facilities), and cable landing stations (where international internet cables come ashore).
Will this only benefit Bengaluru?
This is the key question for most readers — and the policy’s own stated goal is actually to spread benefits beyond Bengaluru. Karnataka has already outlined plans for data centre parks across three cities: Bengaluru, Mysuru, and Mangaluru, with a combined 1 GW capacity target, including a proposed 500 MW park near Hoskote. Mangaluru in particular is being positioned as a new tech hub under this policy — a shift from the old pattern where nearly all major tech investment concentrated in Bengaluru alone.
The electricity and water concerns
Data centres are notoriously power-hungry and, depending on their cooling systems, can also consume large amounts of water — this has been a major point of criticism for data centre expansion in other countries. Karnataka’s policy tries to address this directly by:
- Requiring greater use of renewable energy for these facilities
- Mandating advanced, more efficient cooling systems
- Monitoring two key metrics: Power Usage Effectiveness (PUE) and Water Usage Effectiveness (WUE) — essentially scorecards that measure how efficiently a data centre uses electricity and water relative to its computing output
- Introducing resource heat mapping — assessing local water and energy availability before approving where a new data centre can be built, rather than approving locations first and dealing with strain later
Performance-linked incentives are also built in, meaning operators that run more efficient, sustainable facilities stand to gain more from the policy than those that don’t.
What about jobs?
Data centres are not large employers in the traditional factory sense — they’re highly automated facilities. But they do create jobs in construction, electrical and cooling systems engineering, network operations, cybersecurity, and facility management, and they tend to attract adjacent investment (cloud service providers, AI companies, connectivity infrastructure) that creates broader tech-sector employment around them. Karnataka is betting that positioning itself early as an AI-ready hub will pull in exactly this kind of secondary investment over the coming years.
The bottom line
This policy represents Karnataka trying to get ahead of the AI infrastructure boom rather than react to it later — while attempting to avoid the electricity and water strain that has become a real problem for data centre hubs elsewhere in the world. Whether it succeeds will depend on execution: how strictly the renewable energy and water-efficiency rules are enforced once investment actually starts flowing in.