Policy Update
Shailja Singh
Background
On 6th July 2026, the Uttar Pradesh Council of Ministers, chaired by the Chief Minister Yogi Adityanath, approved the Uttar Pradesh Data Centre Policy 2026, formulated by the Department of IT & Electronics. The new policy subsumes the 2021 framework, which was amended in November 2022 but lapsed in January this year. The revised policy seeks to position the state as a “green”, and “AI-ready”, and “globally competitive data centre destination,” keeping in view the growing significance of digital infrastructure for powering artificial intelligence (AI) and cloud computing.[3]
The data centre policy 2026 has ambitious targets, including an addition of more than 20,000 MW capacity and a generation of over Rs 2 lakh crore investment. It also proposes to create about 7,500 permanent direct jobs and 50,000 jobs during the construction phase. While the previous policy was focused on attracting investments and data centre capacity, the new policy has a greater emphasis on building an ecosystem conducive to hosting AI computing, high-performance computing, and other cutting-edge digital-age technologies.[3]
The 2021 policy was the first of its kind in the state and set the target of 250 MW data centre capacity, Rs 20,000 crore investment, and at least three private data centre parks. As per the dashboard, as of June 2025, the investment achieved was Rs 21,342.90 crore, and 644 MW proposed capacity was achieved.[4] Thus, a comprehensive data centre policy is considered critical to scaling up India’s digital infrastructure and data centre ecosystem.
The data centre policy 2026 has expanded the scope to promote and support AI compute, high-performance computing, edge data centres, and sustainability. It also provides enhanced benefits for meeting specific technology needs and sustainability goals.[3] Therefore, it may be concluded that the new policy has a vision beyond data centres and supports the State’s commitment to emerge as a major player in the global digital technology ecosystem.
Functioning
The Department of IT & Electronics is in charge of implementing the policy, while Invest UP helps investors through the state’s single-window mechanism. The policy brings together financial incentives, power-related support, land incentives and other measures to encourage data-centre investment in the state.[3]
The policy provides an interest subsidy of up to ₹50 crore for eligible Data Centre Parks and a capital subsidy of up to ₹20 crore for Data Centre Units. It also offers support related to land, electricity and power infrastructure. Land subsidies are at 25% in Madhyanchal and Paschimanchal and up to 50% in Bundelkhand and Purvanchal. The policy also provides a 100% electricity-duty exemption for ten years after the commencement of commercial production, along with provisions for dual-grid power supply for eligible Data Centre Parks.[3]
The policy also has provisions to support the continuity of data-centre operations. Data Centre Industries had previously been declared an essential service by the Uttar Pradesh government, through a government order dated 16 April 2023. This provision is found in the official UPLC policy records.[3]
Environmental considerations are also part of the 2026 policy. The Green and Sustainable Operations Booster links benefits of additional interest-subsidy to green certification, Power Usage Effectiveness (PUE) and the use of renewable-energy. The policy also aims for 50% adoption of renewable-energy in new data centres by 2030.[3] These provisions give sustainability a clear place within the policy framework. Their effectiveness will ultimately lie in how consistently they are implemented and reflected in the environmental performance of operational data centres.
Performance
The policy is barely two months old at the time of writing, so there’s no programme MIS, budget line, CAG audit, or parliamentary committee report to point to yet. The only honest way to gauge performance right now is to look at what the 2021 policy actually delivered, since the 2026 framework is explicitly built on that foundation. For this reason, the implementation of the earlier policy provides the more useful baseline.
Table 1: Implementation Baseline of UP’s Data Centre Policy
| Indicator | June 2025 Status |
| MoUs signed | 29 |
| Proposed investment through MoUs | ₹1,36,124 crore |
| Proposed capacity | 644 MW |
| Investment attracted | ₹21,342.90 crore |
| Projects at GBC stage | 6 |
| Investment at GBC stage | ₹51,878 crore |
| Projects on hold/non-responsive | 11 |
| Investment in on-hold/non-responsive projects | ₹46,300 crore |
| Commercialised projects | 4 of 8 listed |
| Commercialised capacity | 101 MW |
| Land allotted/under consideration | 77.08 acres |
Source: UPLC, Government of Uttar Pradesh, June 2025 policy snapshot.
The implementation record of the Uttar Pradesh Data Centre Policy 2021 provides an important baseline that can be used to evaluate the 2026 policy. According to the latest figures as of June 2025, there are 29 MoUs, with total proposed investment of ₹1,36,124 crore and proposed data-centre capacity of 644 MW. These figures represent investment and capacity commitments and not active infrastructure.[4]
The latest UPLC update provides a more recent picture of how the policy is being implemented. As stated in Reference #4, seven of the eight listed projects have been commercialised, with a total commercialised capacity of 133 MW.[4] This figure should be clearly distinguished from the 644 MW figure, which reflects the proposed capacity under the implementation of the 2021 policy.
There is clearly a gap between proposed investment and commercialised capacity that needs to be taken into account when evaluating the effectiveness of the policy. An MoU is an investment commitment, whereas commercialisation captures the stage of the project when it becomes operational. As such, the performance of the 2026 policy should ultimately be measured by investment realised, capacity commissioned, projects completed and operational performance, rather than just investment announcements.
The implementation of the earlier policy was supported by various steps relating to power supply, transmission and wheeling, electricity duty and other facilitation mechanisms.[1] These steps provided an institutional and infrastructure base for the growth of the data-centre sector in the state.The 2026 policy, on the other hand, raises the bar significantly, with a target of more than ₹2 lakh crore in investment and more than 2 GW of data-centre capacity. It also provides a special incentive package for projects with a capacity of more than 500 MW. [3]
The key performance challenge will therefore be to translate these targets into completed projects and operational capacity. Continuous monitoring of the gap between proposed, approved, commercialised and operational capacity will be essential if the 2026 policy is to achieve its intended outcomes
Impact
Three aspects stand out in this policy’s broader goals: economic diversification, boosting Uttar Pradesh’s digital infrastructure, and stimulating investment beyond existing technology hubs.
In terms of economic diversification, the goal of attracting over ₹2 lakh crore in investment and over 2 GW of data-centre capacity could have a significant effect.[3] It would not only contribute to stronger digital infrastructure, but also help attract more technology-intensive investment and strengthen the role of the IT and electronics sectors in the state’s overall economic development.
The objective of achieving balanced regional development is more challenging to evaluate at this point. Purvanchal and Bundelkhand receive higher land-subsidy support under the policy, which could make them more attractive to investors.[3] However, these incentives alone may not be sufficient to draw major data-centre projects, as supporting infrastructure such as reliable power supply and connectivity will also be needed. The overall impact of these provisions on regional development will become more apparent as specific projects are proposed and implemented across different parts of the state.
Sustainability provisions are another important aspect of the policy. Rather than being treated only as a broad objective, environmental concerns are linked to specific incentives such as green certification, Power Usage Effectiveness (PUE) and renewable-energy use.[3] The policy also explicitly sets an objective of increasing the adoption of renewable energy in new data centres.[3] In practice, however, the impact of these provisions will largely depend on their consistent and effective implementation as the number of data centres grows.
Overall, the policy seeks to combine investment attraction and digital infrastructure development with broader regional participation and more sustainable practices. Its impact will ultimately depend on the extent to which these incentives translate into actual investment, increased operational capacity, wider regional participation and greater resource efficiency.
Emerging Issues
A few concerns stand out as the policy moves from paper to projects on the ground.
1. From investment announcements to operational capacity
The experience of the previous policy shows that a big MoU pipeline does not always translate into data centre capacity.[4]
Way forward: The state needs dashboards on a project level that show the progress from MoU and land allocation to approvals, construction, commissioning, and commercial operations.
2. Rising electricity requirements
AI and HPC workloads are projected to drive demand, with the Union government estimating that data centres’ electricity consumption could peak at 13.56 GW by 2031-32.[9]
Way forward: Data-centre capacity creation must be dovetailed with the state’s requirements for power, transmission, and renewables, particularly for large enterprises.
3. Environmental performance
Increased compute power also means higher energy consumption and associated environmental impact.[3]
Way forward: It is important to decouple green incentives from certifications and encourage performance-based metrics, such as power usage effectiveness, percentage of renewable energy, and water-use efficiency.
4. Regional concentration
Noida and Greater Noida are expected to continue to be preferred locations, given their current infrastructure and proximity to Delhi-NCR.
Way forward: Sustained focus on incentivising investments in Bundelkhand and Purvanchal would require better power and connectivity and the development of industrial and commercial infrastructure.
5. Fiscal cost of incentives
While the fiscal outlay may make the state less attractive to investors, subsidies and exemptions will have a dampening impact on the state’s finances.[3]
Way forward: The state must periodically review if the fiscal outlay on incentives is commensurate with the value captured in terms of investments, commissioned capacity, employment generation, and economic activity.
6. AI infrastructure versus AI capabilities
While the previous policy focused on building an ecosystem for AI applications, the current one seeks to incentivise infrastructure.
The challenge is that more infrastructure does not necessarily lead to more innovation or application-specific AI capabilities.
Power adequacy is probably the biggest one. Absorbing several gigawatts of hyperscale load on top of existing industrial and household demand is no small ask, and the ESMA “essential services” guarantee only means something if the grid can actually back it up during peak stress — a worry that’s already been raised about Telangana’s similar commitment in a state under its own power and water pressure.
Water and cooling sit close behind. As UP starts drawing in the liquid-cooled, GPU-dense facilities this policy is designed to attract, the absence of any mandatory hydrogeological assessment or water-reuse requirement looks like an unfinished part of the framework, not a minor omission.[10]
There’s also the missing scorecard problem — no stated requirement for PUE or WUE disclosure means the “green” claims in the policy are, for now, more aspiration than commitment, which weakens comparisons with states that have gone further on this front.[4]
Then there’s execution risk, which the 2021 numbers make hard to ignore: 644 MW realised against much larger stated ambitions suggests the real bottleneck last time wasn’t the incentive structure but land acquisition, power evacuation infrastructure, and approval timelines. Unless those get fixed operationally, a richer subsidy package alone won’t move the needle much.
Finally, UP isn’t operating in a vacuum. Maharashtra offers up to 60% electricity duty exemption for fifteen years, Telangana reimburses 100% of stamp duty and registration fees — the subsidy competition among states is intense, and increasingly investors seem to weigh power reliability and speed-to-market as heavily as, if not more than, the headline incentive numbers.
Industry voices and infrastructure analysts have generally converged on the same fixes: binding PUE/WUE standards, mandatory disclosure of water sourcing, dedicated renewable power tie-ups for data centre clusters, and regular audits of how fast the single-window clearance system is actually moving — the kind of operational detail that turns a policy announcement into a bankable project.
Way Forward
The Uttar Pradesh Data Centre Policy 2026 reflects a significantly more nuanced approach to strategic digital infrastructure than the state’s earlier policy, which focused on attracting investment and establishing data-centre parks. The newer document integrates AI computing, HPC, edge infra, green operations, and research under the same umbrella.[1][3].
The experience of the first policy also highlights that the focus should not merely be on attracting investments but on how the generated capacities can be leveraged to catalyze a wider set of technological and economic outcomes.
A useful monitoring framework would track at least five outcomes: actual investment realised, capacity commissioned, energy and water efficiency, utilisation of AI/HPC infrastructure, and wider economic spillovers.
The state’s 2026–27 budget offers an opportunity to link the data-centre policy to its wider technology agenda, as reflected in the official budget documents. The ₹100 crore allocation for the development of a Data Centre Cluster, along with other technology and AI-related initiatives, could serve as a useful bridge.[6]
Transparency in the form of regular disclosure of project-level progress will help policymakers, investors, and researchers differentiate between declared, under-construction, and operational projects.
Ultimately, the success of the 2026 policy should not be measured solely by the amount of investment announced. Equally importantly, what this infrastructure will enable needs to be tracked. If UP can combine reliable computing capacity with clean power, skilled manpower, research partnerships, and AI innovation, it can evolve into a stronger digital and technology hub.
The larger opportunity is not merely to store more data in Uttar Pradesh but to leverage this expanding infrastructure as a springboard for AI, research, innovation, and higher-value digital activity.
Selected References and Important Links
1. Government of Uttar Pradesh, 2021, Uttar Pradesh Data Centre Policy 2021, Department of IT & Electronics, Government of Uttar Pradesh. https://invest.up.gov.in/up-data-centre-policy-2021/?utm_
2. Government of Uttar Pradesh, 2022, First Amendment to Uttar Pradesh Data Centre Policy 2021, Department of IT & Electronics, Government of Uttar Pradesh. https://invest.up.gov.in/wp-content/uploads/2025/03/Final-Policy-Highlight_240325.pdf?utm_
3. Government of Uttar Pradesh, 2026, Uttar Pradesh Data Centre Policy 2026, Department of IT & Electronics, Government of Uttar Pradesh. https://invest.up.gov.in/uttar-pradesh-data-centre-policy-2026/
4. Uttar Pradesh Electronics Corporation Limited, 2025, Uttar Pradesh Data Centre Policy: Implementation Status and Project Details, Government of Uttar Pradesh. https://uplc.up.gov.in/en/article/up-data-center-policy#Policy
5. Uttar Pradesh Electronics Corporation Limited, 2025, Department of IT and Electronics: Policy Presentation, Government of Uttar Pradesh. https://uplc.up.gov.in/policy/Department-of-IT-and-Electronics-2025.pdf
6. Government of Uttar Pradesh, 2026, Uttar Pradesh Budget 2026–27, Finance Department, Government of Uttar Pradesh. https://budget.up.nic.in/?
7. Ministry of Finance, 2026, Economic Survey 2025–26: Services, Government of India. https://www.indiabudget.gov.in/economicsurvey/index.php?
8. Ministry of Finance, Government of India. (2026). Economic Survey 2025–26: Evolution of the AI Ecosystem in India: The Way Forward, Chapter 14.https://www.indiabudget.gov.in/economicsurvey/doc/eschapter/echap14.pdf?
9. Press Information Bureau, 2026, Data Centre Capacity and National Computing Infrastructure, Ministry of Electronics and Information Technology, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2239616&lang=1®=1
10. Prasad, Sudesh, 2026, Uttar Pradesh approves Data Centre Policy 2026 to expand AI infrastructure, Dataquest. https://www.dqindia.com/government-policy/up-data-centre-policy-2026-ai-infrastructure-12143538
11. Elets News Network, 2026, UP Cabinet Approves New Startup and Data Centre Policies to Drive Innovation and Investment, Elets eGov. https://egov.eletsonline.com/2026/07/up-cabinet-approves-new-startup-and-data-centre-policies-to-drive-innovation-and-investment/
12. Financial Express, 2026, Uttar Pradesh approves new Data Center Policy 2026 to attract over Rs 2 lakh crore investment, Financial Express. https://www.financialexpress.com/business/industry-uttar-pradesh-approves-new-data-center-policy-2026-to-attract-over-rs-2-lakh-crore-investment-4285606/
13. ET Data Centers, 2026, UP Offers Enhanced Incentives for Eastern UP, Bundelkhand Data Centers, Economic Times Data Centers. https://datacenters.economictimes.indiatimes.com/news/policy-land-power/up-offers-enhanced-incentives-for-eastern-up-bundelkhand-data-centers/132382135
About the Contributor
Shailja Singh is a third-year B.A. (Hons.) Political Science student at the University of Delhi. Her academic interests include public policy, governance, digital governance, and international relations. She is particularly interested in understanding policy processes, institutional frameworks, and emerging governance challenges. As a Policy Research Intern at IMPRI, she is developing her research and analytical skills while contributing to work on contemporary policy issues.
Acknowledgement
The author sincerely thanks the IMPRI team for their guidance and support throughout the preparation of this Policy Update. The author also acknowledges the valuable feedback and constructive suggestions provided by the reviewers, which helped improve the clarity, structure, and analytical depth of the article.
Reviewers -Tanisha and anamika
Publisher – Prisha Sachdeva
Disclaimer
This article is intended for academic purposes only. The views expressed are those of the author and do not necessarily reflect the views of IMPRI or any government.
