Karnataka has approved a new five-year framework that attempts to redraw the relationship between digital infrastructure growth and the resources required to sustain it. The Karnataka Sustainable Data Centre Policy 2026–2031 places data center investment, AI readiness, energy efficiency, water management and regional infrastructure within a single policy architecture. The state wants to reach 1 GW of cumulative data center IT load by 2031 while positioning itself to account for 10–12% of India’s AI-ready data center capacity. The move comes as AI, cloud computing, IoT, 5G, global capability centers and fintech continue to increase demand for high-density computing infrastructure. The policy therefore signals a shift from infrastructure expansion as an investment proposition toward infrastructure planning as a resource-management problem.

Karnataka Recasts The Data Center Growth Model

The policy arrives after years in which Bengaluru became synonymous with Karnataka’s technology economy, making the city a natural focal point for digital infrastructure investment. The new framework instead seeks to distribute future data center development across a wider geography, including emerging regional corridors and locations beyond Bengaluru. The government has identified data center units, parks, operators, edge facilities, cable landing stations and allied infrastructure as part of the ecosystem it wants to develop. That broader definition reflects the range of infrastructure covered by the policy, which includes data center facilities, parks, edge centers, cable landing stations and allied infrastructure. The policy also proposes Sustainable Data Centre Zones and parks, alongside a Centre of Excellence intended to support research and innovation. The policy consequently addresses data centers as part of a wider infrastructure ecosystem spanning facilities, connectivity, power, sustainability, research and regional development.

Priyank Kharge, Karnataka’s minister for IT and E-Governance, framed the policy as a response to a technology sector that has changed faster than the infrastructure frameworks supporting it. “Karnataka was among the early states to recognise the importance of data centres and create a policy framework to support their growth. But the technology landscape has changed significantly, particularly with the rapid growth of AI, and we have also become more conscious of the environmental footprint of this infrastructure,” Kharge said. “Sustainable Data Centre Policy is therefore an important course correction – one that allows us to continue attracting the data infrastructure that the digital economy needs, while making sustainability, energy efficiency and responsible use of water central to how we plan and develop this sector,” he added.  The statement places AI at the center of the policy’s rationale while acknowledging that greater computing demand changes the environmental equation around infrastructure.

Bengaluru Is No Longer The Whole Story

The most consequential geographic element of the policy may be its attempt to move data center development beyond Bengaluru. Karnataka has identified emerging regional corridors and locations such as Mangaluru and Mysuru as part of its wider ambition to distribute digital infrastructure across the state. For Mangaluru, the government has highlighted coastal connectivity and the potential for future cable-landing infrastructure as factors that could support its role in the state’s expansion. The policy instead identifies locations beyond Bengaluru, including Mangaluru and Mysuru, as opportunities for expanding Karnataka’s data center ecosystem. The policy’s resource heat mapping is intended to identify suitable locations based on land, electricity, water, connectivity and other infrastructure requirements. The framework therefore provides for a broader geographic footprint, with regional locations assessed against the infrastructure requirements needed for data center development.

The Beyond Bengaluru strategy also gives the policy a wider economic purpose. Data center expansion can generate demand across construction, electrical infrastructure, cooling, connectivity, operations, maintenance, engineering and specialized technology services. Karnataka’s policy framework includes investment facilitation, research and development, skilling and local manufacturing among the areas eligible for support. That means the state is not limiting its ambition to attracting operators that deploy servers inside its borders. It is also seeking to develop a deeper domestic value chain around the infrastructure required to build and operate those facilities. This matters for long-term resilience because an ecosystem with local engineering capability, manufacturing participation and research capacity can reduce dependence on a narrow set of external suppliers. Karnataka is therefore linking geographic decentralization with industrial development rather than treating the two as separate policy objectives.

A ₹1,300.45 Crore Framework For The Next Phase

The government has proposed a revised ₹1,300.45 crore budget framework for implementing the policy through 2031. The funding framework covers a wider set of priorities than direct data center construction, with incentives linked to investment, power and digital infrastructure, green energy, research, skilling, connectivity and sustainability. The policy also seeks to support edge data centers, cable landing stations, AI-ready infrastructure and emerging computing requirements, including AI- and quantum-ready facilities. That breadth reflects the policy’s coverage of data center investment alongside power and digital infrastructure, green energy, research and development, skilling, connectivity and local manufacturing. It also gives Karnataka an incentive framework covering the location and development of infrastructure across data centers, energy, connectivity, research, skilling and related areas. The strategic test will be whether those incentives translate policy objectives into projects whose resource requirements align with the state’s infrastructure realities.

The implementation architecture gives the policy an institutional structure intended to connect investors with the government. Karnataka’s Department of Electronics, IT, Biotechnology and Science & Technology will anchor implementation, while the Karnataka Innovation and Technology Society will serve as the registration and policy interface. Karnataka Udyoga Mitra will act as the single-window agency for clearances associated with data center proposals. That arrangement matters because the development cycle for large digital infrastructure projects involves multiple approvals and dependencies that can extend well beyond the physical construction of a facility. A coordinated government interface can therefore become as important to investment decisions as financial incentives. The policy ties its investment framework to green energy, power and water efficiency, research, skilling and other infrastructure priorities identified by the state. In practical terms, Karnataka now has to demonstrate that its sustainability framework can operate with the same consistency as its investment facilitation machinery.

The Policy’s Real Test Begins After Approval

Karnataka’s 1 GW objective gives the policy a clear capacity ambition, but the more significant question concerns the quality and location of that capacity. The government has explicitly said its objective is not simply to increase capacity but to determine where infrastructure should be built and what supporting systems should surround it. “Our objective is not simply to add more capacity, but to build the right capacity, in the right locations and with the right infrastructure. This means greater use of renewable energy, newer cooling technologies, better water management and stronger connectivity, while also creating opportunities beyond Bengaluru. Karnataka has the technology ecosystem and talent to lead India’s next phase of digital infrastructure, and this policy is designed to ensure that this growth is both globally competitive and sustainable,” Kharge said.

Karnataka’s new framework brings digital infrastructure development together with renewable energy, power and water efficiency, research, skilling, local manufacturing and regional expansion. The new framework acknowledges that convergence by bringing renewable power, cooling, water, connectivity, research, manufacturing and site selection into one policy structure. Its ambition extends beyond Bengaluru while maintaining the state’s established technology ecosystem as the foundation for further growth. At the same time, the policy’s resource heat mapping is designed to identify locations according to the availability of land, electricity, water, connectivity and other infrastructure. In addition, the policy explicitly links its sustainability framework to renewable energy, energy efficiency, water management, advanced cooling and carbon-emission reduction in data center operations. More importantly, Karnataka has incorporated resource mapping, sustainability-linked incentives and AI-ready infrastructure into the framework governing future data center development.