By Haresh B. Jhala

Digital ambition must be matched by transparency on resources and public support

Gujarat has placed one of the biggest bets in India’s digital economy. Through the Viksit Gujarat Data Centre Policy 2026-29, the state aims to attract ₹6 lakh crore in investment and build 7.5 GW of data centre capacity. The opportunity is undeniable, particularly for Gujarat’s MSMEs. Yet investments of this magnitude also warrant closer scrutiny. Beyond the headlines lie fundamental questions about power, water, subsidies and employment—questions that deserve informed public debate before this vision becomes reality.

A Landmark Policy with National Significance

With the launch of the Viksit Gujarat Data Centre Policy 2026-29, Gujarat has become the first Indian state to introduce a dedicated policy for the data centre industry. The government expects the first phase alone to attract ₹6 lakh crore in investment and create 7.5 GW of capacity, with Dholera Special Investment Region emerging as the centrepiece of this digital infrastructure.

Chief Minister Bhupendra Patel unveiled the policy in Gandhinagar on 9 July 2026, while Chief Secretary M. K. Das described it as a “game changer”. Deputy Chief Minister Harsh Sanghavi went a step further, stating that Dholera has the potential to become the world’s largest Data Centre City. According to the state government, 14 hyperscale investors have already expressed interest, with proposals reportedly exceeding the policy’s initial target.

The ambition is bold and deserves recognition. More importantly, it deserves rigorous examination.

A Real Opportunity for Gujarat’s MSMEs

MSMEBriefing has already highlighted how this investment could create substantial business opportunities for Gujarat’s MSMEs.

Construction contractors, structural steel fabricators, electrical contractors, HVAC manufacturers, cooling solution providers, cable manufacturers, facility management companies, security services and maintenance contractors all stand to benefit from the creation of an entirely new industrial ecosystem.

The opportunity is genuine.

However, supply-chain participation represents only one side of the policy. The larger question concerns the public resources required to sustain this ecosystem over the next two decades.

The Real Debate Is About Scale

To its credit, the policy recognises the environmental implications of data centres.

It mandates that at least 51% of electricity consumption must come from renewable energy and encourages the use of desalinated water instead of municipal or agricultural supplies. Developers are also eligible for capital assistance of up to ₹2 crore per million litres per day (MLD) of desalination capacity.

These provisions are welcome.

Yet they address where resources will come from, not how much will ultimately be consumed.

Renewable energy still requires land, transmission infrastructure and storage. Desalination plants consume significant electricity, generate concentrated brine that requires careful disposal, and demand substantial capital investment.

The critical policy question therefore is not whether these resources are renewable, but whether their scale remains proportionate, transparent and publicly monitored.

The Power Arithmetic

The numbers illustrate why scale matters.

According to official data for 2024-25, Gujarat’s electricity grid consumed approximately 36.75 crore units (367,500 MWh) every day.

Using internationally accepted Power Usage Effectiveness (PUE) benchmarks, a fully operational 7.5 GW data centre ecosystem could require approximately 2.5 lakh MWh of electricity every day, including cooling requirements.

This represents nearly two-thirds of Gujarat’s present daily electricity consumption across households, agriculture, commerce and industry combined.

This comparison is not intended to alarm. Rather, it helps citizens appreciate the magnitude of the commitment being contemplated.

The Water Arithmetic

Water deserves equal attention.

Applying internationally accepted Water Usage Effectiveness (WUE) standards, depending on cooling technology, a 7.5 GW data centre ecosystem could require between 126 million and 453 million litres of water every day.

It is important to emphasise that this is a methodology-based estimate, not an official government projection, because no Gujarat-specific water demand assessment has yet been published.

Even so, the comparison is revealing.

Ahmedabad Municipal Corporation currently supplies approximately 1,700 MLD of water daily to the state’s largest city.

A fully developed data centre ecosystem could therefore require water equivalent to 7% to 27% of Ahmedabad’s daily municipal supply.

The policy rightly proposes desalination rather than drawing upon drinking water networks. Nevertheless, desalination itself demands energy, infrastructure and public financial support.

International experience reinforces this concern.

The United Arab Emirates, which faces similar climatic conditions, expects annual data centre water consumption to increase from 23.5 billion litres in 2025 to approximately 61 billion litres by 2030, despite widespread adoption of recycled water and closed-loop cooling technologies.

Efficiency improves outcomes—but it rarely eliminates the consequences of scale.

The Subsidy Question

The policy’s subsidy framework deserves equally close examination.

Eligible data centres will receive a ₹1 per unit electricity tariff subsidy for 20 years, along with 100% reimbursement of electricity duty for the same period. Additional incentives include capital subsidy, interest subsidy, SGST reimbursement and stamp duty exemption.

Now compare this with Gujarat’s MSMEs.

Under the Gujarat Electricity Regulatory Commission’s tariff schedule effective 1 April 2026, most industrial consumers pay a base energy charge of approximately ₹4.00 to ₹4.30 per unit, before demand charges, fuel adjustment costs and time-of-day surcharges. They also continue to pay electricity duty in full.

Under the Viksit Gujarat Industrial Policy 2026, MSMEs are eligible for a power tariff subsidy of ₹1 to ₹2 per unit, but only for five years. More importantly, this benefit competes within the overall subsidy ceiling of 35% to 45% of eligible fixed capital investment, alongside capital and interest subsidies.

The contrast is striking.

One sector receives deeper support for four times longer, together with a full electricity duty waiver, while the sector that employs the largest workforce must share a much smaller subsidy across multiple incentive categories.

That comparison deserves public discussion.

Investment Versus Employment

Public policy should also examine the relationship between capital investment and employment generation.

Maharashtra’s data centre pipeline of ₹16.69 lakh crore is expected to create around 1.46 lakh jobs, implying investment of approximately ₹11-12 crore per job.

Independent workforce studies suggest that once operational, large hyperscale data centres typically require only 0.15 to 0.35 permanent employees per megawatt.

Applying this benchmark, Gujarat’s proposed 7.5 GW capacity may generate between 1,100 and 2,600 permanent operational jobs.

Now compare this with India’s MSME ecosystem.

As of February 2026, the Udyam Registration Portal reported 7.83 crore registered MSMEs, collectively employing 34.5 crore people.

The comparison is not intended to diminish the strategic importance of digital infrastructure. Rather, it highlights a basic policy question:

Should the duration and depth of public subsidies also reflect employment intensity?

Growth Must Be Accompanied by Transparency

None of these questions argue against Gujarat’s digital ambitions.

On the contrary, large-scale investment in digital infrastructure can strengthen the state’s competitiveness, attract global technology companies and create significant opportunities for Gujarat’s manufacturing and services sectors.

But projects of this scale must also be accompanied by continuous public disclosure.

The government should periodically publish actual electricity consumption, renewable energy utilisation, water usage, desalination output, employment generated, and subsidies disbursed. Transparency should become an integral part of implementation rather than an afterthought.

Public confidence is strengthened not by ambitious announcements alone, but by measurable outcomes.

The Editorial View

Gujarat’s data centre policy marks one of the most ambitious industrial initiatives undertaken by any Indian state. Its vision deserves appreciation, and its economic potential is undeniable.

Yet every transformational policy carries an equally important responsibility—to ensure that public resources are allocated transparently, subsidies remain proportionate to wider economic objectives, and citizens understand the long-term implications of today’s decisions.

The debate, therefore, is not whether Gujarat should pursue digital leadership.

It is whether power, water and public incentives—resources that ultimately belong to the people—are being deployed in a manner that is transparent, equitable and aligned with the state’s broader development priorities.

That is not an argument against growth.

It is the standard by which responsible growth should always be judged.

EOM.

*Note: All official figures are drawn from the Viksit Gujarat Data Centre Policy 2026-29, the Viksit Gujarat Industrial Policy 2026, the Gujarat Electricity Regulatory Commission Tariff Schedule (effective 1 April 2026), state-reported electricity consumption data, Ahmedabad Municipal Corporation water supply data, Udyam Registration Portal employment statistics, and publicly reported Maharashtra data centre investment figures. Power and water consumption estimates for the proposed 7.5 GW data centre ecosystem are methodology-based calculations using internationally accepted PUE and WUE benchmarks and should not be interpreted as official government projections.