The Uttar Pradesh (UP) Data Center Policy-2026, approved by the state cabinet chaired by Chief Minister Yogi Adityanath on Monday, places strong emphasis on artificial intelligence (AI)-ready capacity, Graphics Processing Unit (GPU) infrastructure, sustainability and regional development, according to a report in The Hindu BusinessLine. Analysts said this sends a strong signal to the market and will help unlock the next wave of investments.
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The earlier policy expired on January 27, 2026, and the new one aims to develop the state as a green and AI-ready data center hub with an additional capacity of 2 Gigawatts. The UP government said the policy targets an investment of over ₹2 lakh crore and has the potential to generate indirect employment for around 50,000 people.
Policy Highlights and Incentives
The policy introduces several new incentives, as outlined by IT and Electronics Minister Sunil Sharma: "The new policy places special emphasis on GPU-based infrastructure, energy efficiency, and sustainable development. In addition, extra incentives have been proposed for the Bundelkhand and Purvanchal regions. The policy includes provisions such as incentives for Tier/Rating-3 and 4 Data Centers, AI Compute Booster incentives, and Green and Sustainable Operations incentives."
| Policy Feature | Details |
|---|---|
| Additional Capacity | 2 Gigawatts |
| Investment Target | Over ₹2 lakh crore |
| Indirect Employment | ~50,000 people |
| Regional Focus | Extra incentives for Bundelkhand and Purvanchal |
| Tier Incentives | Tier/Rating-3 and 4 Data Centers |
| AI Compute Booster | Specific incentives for AI compute infrastructure |
| Green & Sustainable | Incentives for sustainable operations |
The state had previously implemented the UP Data Center Policy-2021 in January 2021, amended on November 7, 2022. Under that policy, out of six Data Center Parks and two Data Center units with capacity less than 40 Megawatts involving investment of around ₹21,343 crore, seven projects have already become operational, according to Sharma.
Expert Reactions and Industry Impact
Shalini Dawar, Partner and Leader, Data Center at EY-Parthenon, told businessline: "The next priority should be swift implementation, robust power and connectivity infrastructure, and close collaboration between government and industry to translate these ambitions into scalable capacity and long-term economic value." She added that as India enters a new phase of AI adoption, policy support is essential to accelerate deployment at scale, reduce investment friction, and create globally competitive infrastructure ecosystems.
Faisal Kawoosa, Chief Analyst and Founder at Techarc, noted that UP has already proved its mettle in mobile manufacturing, hosting Samsung’s largest plant as well as plants of Vivo, Oppo, and others. "This proven track record definitely puts UP ahead of many other States. It has the scale to offer as well as record to show. The data centre story will further give it an impetus and help UP emerge as a strong State on the technology and digital pathways," Kawoosa said.
He also commented on regional dynamics: "So far, we have seen North as a region lagging where Southern States had taken lead, but UP now seems to be changing this perception, which is good not only for the State but for the entire region. It helps creation of jobs for neighbouring States also."
Piyush Somani, Promoter, Managing Director and Chairman of ESDS Software Solution, said the strategic initiative has the potential to catalyse an entire digital economy by attracting large-scale investments, accelerating innovation, and generating high-value employment across cloud computing, AI, and advanced digital infrastructure. "More importantly, it lays the foundation for developing a future-ready talent ecosystem that will further strengthen India’s global digital competitiveness. With these critical enablers in place, Uttar Pradesh has positioned itself as one of the country’s compelling destinations for digital infrastructure investment," Somani said.
The policy is expected to drive momentum for hyperscale cloud providers, data centre operators, and financial investors, with strong policy support reducing investment friction and enabling scalable capacity. The focus on AI-ready infrastructure and GPU capabilities positions UP to capture a significant share of India's growing AI infrastructure market.
