India to Update Data Centre Policies for AI Consumption Apart from accommodating AI-led consumption demands, the government aims to position India as a global data centre hub.
By Kul Bhushan
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Policies around data centres in India are set to undergo changes which will align with the growing consumption of AI.
According to an Economic Times report, the government may make changes to the certification framework it has been working on for data centres so that it meets the requirements of the massive consumption demands of AI.
The report added that the Ministry of Electronics and Information Technology (MeitY) is working on national standards for AI data centres, which will cover operations and maintenance, among others. The data centres in question are said to need five times higher power and 10 times more water than conventional centres.
MeitY's Standardisation Testing and Quality Certification Directorate has also held discussions with the telecom regulator, TRAI, the Telecommunication Engineering Council, and other agencies. Even as the ministry had been working on standardising data centres, the advent of AI has compelled them to make necessary changes, including physical metrics.
It's worth noting that India has already floated a draft national data centre policy. Apart from accommodating AI-led consumption demands, the government aims to position India as a global data centre hub by providing tax breaks and reliefs, easier clearances, and a focus on sustainability.
"These changes recognize that AI workloads place unique demands on infrastructure and security. Without specific standards, facilities could suffer from inefficiency, instability, or breaches. Aligning certification with AI‑centric needs ensures operational reliability and resilience," Biswajeet Mahapatra, Principal Analyst at Forrester told Entrepreneur India.
The report on possible changes to the framework comes days after Union Minister Piyush Goyal said that India is a preferred destination for data centres as the country now possesses the requisite infrastructure, specifically power. He was referring to India's national grid, which is essentially an interconnected electricity network that recently crossed 500 Gigawatts (GW) of total installed power capacity.
"...Europe does not have a national grid. Even the US does not have a national grid. But India has a national grid. So we are a preferred destination for data centres and as they are planning a growth in the years to come. There will be sufficient power available to make sure that we meet the need of our people, farmers, industry and commercial establishments including data centres and GCCs," Goyal was quoted as saying.
A recent CBRE report gives a detailed overview of India's rising data centre capabilities and prowess.
According to the report, India's operational DC stock reached nearly 1,530 MW (translating to 23 million sq. ft.), as of 9M (January-September) 2025, with 260 MW of new supply added during the year.
"Nearly 90% of existing capacity remains anchored in Mumbai, Chennai, Delhi-NCR, and Bengaluru, powered by multiple undersea cable landing stations, excellent fibre optics network, supportive government policies, and established financial ecosystems," the report added.
And as far as the capital flows go, between 2019 and 9M 2025, India secured nearly USD 94 billion in investment commitments from global and domestic players. Telangana, Maharashtra, Tamil Nadu, Uttar Pradesh, West Bengal, and Karnataka together accounted for about 45% of this capital.
Having said that, standardisation of data centres with AI in focus is also set to benefit Indian businesses. Also that the sector is becoming a hot avenue for investments too.
"Uniform and India‑tailored certification simplifies compliance with local regulations that vary by state, enabling smoother project development. It encourages use of indigenous technology and renewable energy in certified facilities, supporting sustainability goals and reducing dependency on global frameworks," Mahapatra said.
"The sector is set to continue its rapid expansion, driven by AI, cloud and digital services. Capacity is expected to rise significantly, with projections suggesting India will add substantial gigawatt capacity by 2026–2027. The demand for certified, reliable, AI‑ready infrastructure will accelerate investment and development," he added.
