NITI Aayog launched a Data Centre Evaluation Framework on Wednesday to help states assess proposals for new data centres and identify infrastructure gaps. According to Debjani Ghosh, Distinguished Fellow at NITI Aayog, the framework aims to help states plan for the growing data centre industry while ensuring adequate availability of electricity, water and other infrastructure needed to support long-term expansion. As reported by ANI, Ghosh emphasized that states must evaluate data centre proposals by considering not only the investment they could attract but also their long-term sustainability and contribution to the local economy. The framework comes as global investments in AI-related data centres over the next few years are expected to cross USD 1 trillion, creating significant opportunities for India to attract a substantial share of this investment. NITI Aayog CEO Anurag Jain confirmed that all states are developing policies to attract data centres, with nine or 10 states already showing initial interest in the framework.
The report emphasizes that states must verify whether their electricity grids can meet data centre demand and account for future expansion needs. As reported by NITI Aayog, states should assess the total electricity demand of proposed data centres and identify the cost and responsibility for upgrading power infrastructure. The framework requires states to prepare 20-30 year seasonal catchment water balance covering surface water, groundwater, municipal supply, treated wastewater, and competing demands, particularly agriculture. In areas facing water stress, projects should not further strain existing freshwater resources, and water requirements must be assessed based on cooling technology used by data centres. The framework recommends that surface-water, groundwater or municipal-water allocation should not reduce dependable supply for existing users and requires basin-stress and public-supply impact assessment with peak-condition water use efficiency.
The framework recommends that states designate and prepare data-centre-ready zones by verifying land title, permitted use, zoning, and expansion headroom. According to the report, states should pre-assess grid, water, substation readiness and prioritise renewable-energy-rich zones with available connectivity where this limits long-distance transmission. The report emphasizes the need for common standards, templates and guidance from the central government to support sector growth across states. The framework encourages states to promote the use of Indian technology and infrastructure suppliers while linking incentives to measurable outcomes including project commissioning, renewable energy use, energy and water efficiency, employment and local procurement. States must assess and track disaster-recovery and business-continuity arrangements, including seismic risk, power and network redundancy, recovery objectives and emergency operating procedures.
The report calls for states to assess the net economic contribution of data centre projects and weigh it against public support offered to developers. As reported by NITI Aayog, states should evaluate local employment, training, research and development, and procurement from domestic companies. The framework recommends time-bound end-to-end digital single-window mechanism to coordinate approvals and requires states to publish an approval matrix listing clearances required, authorities responsible, indicative processing times, fees and escalation mechanisms. States should define targets companies must meet to qualify for incentives and specify how progress will be measured. The report calls for a practical guide to enable data-centre growth while protecting local systems, securing measurable public value and maintaining clear accountability throughout the project lifecycle. The framework aims to help states move beyond competition for investment announcements towards competition based on investment readiness, infrastructure quality and sustainable economic value.
According to Ghosh's analysis, global data centre power requirements could reach 90 gigawatts over the next three to four years, based on ITU predictions. She noted that the gap between power demand and available supply was around 50 gigawatts globally, which could fall to around 20 gigawatts if renewable energy is included. This massive demand growth underscores the critical importance of India's proactive planning to ensure sufficient infrastructure, water, power and skilled people are available to support this global expansion in data centre capacity. The framework emphasizes that data centres must be treated as strategic infrastructure rather than just investment projects, highlighting their critical role in India's sustainable development path.
