NITI Aayog and Deloitte release new framework to guide State approvals for data centres

New Approval Rules

NITI Aayog and Deloitte India have jointly developed a new framework that links data centre approvals to the verified availability of electricity, water, and other key infrastructure. Released on Wednesday, October 14, 2026, the document requires States to weigh a project's economic benefits against the public support and concessions it receives. The framework proposes shifting away from single project approvals to planning for entire campuses and infrastructure corridors.

Growth and Resource Strain

India had 271 data centres as of January 2026, with an installed capacity of about 1.57 gigawatts by August 2026. Industry estimates project this capacity to grow to 4.5 to 6.5 gigawatts by 2030. Electricity consumption is expected to rise from 13 terawatt-hours in 2024 to 57 terawatt-hours by 2030. Several States are competing for investments, with Maharashtra and Tamil Nadu leading, while Gujarat, Uttar Pradesh, Andhra Pradesh, Odisha, Telangana, and Madhya Pradesh also pursue projects. However, this rapid growth has sparked local opposition. Residents in Thane protested against a proposed Amazon data centre over resource use and its nearness to homes, schools, and hospitals, while Google faced objections over water and ecology for a 15-dollar-billion project near Visakhapatnam.

Framework Pillars and Oversight

The guidelines advise States to conduct 20 to 30-year seasonal water availability assessments, protect current users, and make developers pay for exclusive grid assets. Incentives can be tied to targets like jobs, clean energy use, and local buying. A five-pillar framework also addresses environment safeguards, climate risks, and governance, suggesting a central audit mechanism with the Ministry of Electronics and Information Technology as the main ministry. The document does not state if these recommendations are formally adopted or binding on States.

Context

Data centres house computer systems and storage to keep online services running, but they need massive amounts of electricity and water to stay cool. As artificial intelligence grows, power demands from these facilities have increased sharply worldwide. State governments often offer tax breaks and land concessions to attract these investments, which can sometimes create tension with local communities over shared resources.