Karnataka Sustainable Data Centre Policy 2026-31: State Targets 1 GW AI Infrastructure by 2031

Bengaluru: Karnataka has approved a new Sustainable Data Centre Policy 2026-31, setting an ambitious target of reaching 1 GW of cumulative data centre IT load by 2031 as demand for artificial intelligence, cloud computing and other digital technologies accelerates.

The five-year policy, cleared by the Karnataka Cabinet on September 18, also aims for Karnataka to account for 10-12% of India’s AI-ready data centre capacity by 2031. The state has proposed a revised budget framework of around ₹1,300.45 crore for implementing the policy.

The move marks a shift in Karnataka’s approach to data centres. Instead of focusing only on adding computing capacity, the policy places greater emphasis on power efficiency, renewable energy, water management, advanced cooling and stronger digital connectivity.

Why data centres matter for AI

Data centres are the physical infrastructure behind cloud services, online platforms, financial technology, artificial intelligence and other digital services.

AI applications require significant computing power, which means demand is increasing for high-capacity servers, specialised computing equipment, reliable electricity and advanced cooling systems.

Karnataka’s new policy is designed to support this expansion by covering data centre units and parks, edge data centres, cable landing stations and other supporting infrastructure.

Sustainability becomes a key focus

One of the biggest features of the policy is its focus on reducing the environmental impact of data centres.

The state plans to encourage greater use of renewable energy, energy-efficient systems, advanced cooling technologies and improved water management. It will also monitor indicators such as Power Usage Effectiveness (PUE) and Water Usage Effectiveness (WUE).

The policy proposes the development of sustainable data centre zones and parks, along with a Centre of Excellence for Data Centres to support research, innovation and ecosystem development.

Karnataka wants growth beyond Bengaluru

The policy also seeks to reduce the concentration of digital infrastructure in Bengaluru.

The government plans to encourage data centre development in other parts of Karnataka, including Mysuru and Mangaluru, as part of its wider “Beyond Bengaluru” strategy.

Mangaluru has been identified as having potential because of its coastal location, connectivity and the possibility of future cable-landing infrastructure. The policy also includes support for edge computing and related digital infrastructure.

Resource mapping could guide new projects

A major infrastructure component is the proposed use of Data Centre Resource Heat Mapping.

The system is intended to help identify locations based on the availability of land, electricity, water, connectivity and other infrastructure.

This is important because large data centres require reliable power and substantial cooling infrastructure. Choosing locations based on resource availability could help Karnataka manage the infrastructure pressure created by rapid expansion.

Investment and employment opportunities

The policy provides incentives across areas including capital investment, land, electricity, connectivity, renewable energy, research and development and skill development.

It also seeks to strengthen the wider data centre value chain, creating opportunities for engineering companies, cooling-system providers, renewable energy firms, construction companies, connectivity providers and maintenance businesses.

The policy is expected to support infrastructure development associated with AI, cloud computing, IoT, 5G, big data and other emerging technologies.

What does 1 GW actually mean?

The 1 GW target refers to cumulative data centre IT load, meaning the electricity capacity required by the computing equipment inside the facilities.

It therefore represents more than just new buildings. Achieving the target will require supporting infrastructure, including reliable electricity networks, cooling systems, water resources, fibre connectivity and suitable industrial locations.

This makes the policy relevant not only to technology companies but also to the wider infrastructure ecosystem.

What comes next?

The Department of Electronics, IT, Biotechnology and Science & Technology will oversee implementation. The Karnataka Innovation and Technology Society (KITS) will handle registration and policy implementation, while Karnataka Udyoga Mitra will serve as the single-window agency for clearances.

Karnataka’s challenge now will be turning the policy framework into actual projects while ensuring that rising AI-related computing demand does not create excessive pressure on electricity and water resources.

With a 1 GW target by 2031, the policy places Karnataka firmly in India’s expanding race to build the physical infrastructure required for the next generation of AI and digital services.