- The 2026 policy revives a 50 per cent land subsidy for Bundelkhand and Purvanchal. The 2021 version offered the same deal and drew no data centres to either region in four years.
When Uttar Pradesh’s IT minister Sunil Sharma unveiled the state’s new Data Centre Policy 2026 on 6 July, he highlighted one provision above all others. The policy, he said, offers extra incentives for Bundelkhand and Purvanchal (approximately southern and eastern Uttar Pradesh).
Companies setting up data centres in the two regions will receive a subsidy covering 50 per cent of the cost of land, compared with 25 per cent elsewhere in the state.
The incentive is not new. It was part of the 2021 policy that the new one replaces. In four years, it did not bring a single data centre to either region.
The 2021 policy approved multiple projects worth ₹21,343 crore with a combined capacity of 644 MW. Seven of these are now operational, run by companies including Yotta, NTT, STT GDC, AdaniConneX and CtrlS.
The outcome is not difficult to explain though. Land typically accounts for just 1–3 per cent of the cost of building a data centre. Operators choose locations based on reliable electricity, fibre connectivity, internet exchange points and access to skilled workers. Noida already had those advantages before Uttar Pradesh introduced its first data centre policy, as the 2021 policy itself acknowledged.
Bundelkhand extracts more groundwater than it recharges in four of its seven districts. Much of rural Purvanchal still receives only 14–18 hours of electricity a day. A 100 MW data centre consumes electricity comparable to around 80,000 homes and, even with closed-loop cooling, still requires significant water.
These considerations dominate site selection. McKinsey’s 2026 analysis found that utilities account for nearly 30 per cent of the variation in operating costs across locations, making them the single biggest factor, well ahead of land. Industry studies have reached similar conclusions.Research by Rice University’s Tommy Pan Fang and Harvard’s Shane Greenstein likewise found that hyperscale operators move into remote regions only where electricity and water are abundant, not simply because land is cheap.
Four of Bundelkhand’s seven districts named in the policy, Mahoba, Chitrakoot, Lalitpur and Hamirpur, already extract more than 70 per cent of their annual groundwater recharge. In Purvanchal, the state-owned discom PuVVNL is Uttar Pradesh’s weakest financially, leading to regular load-shedding and leaving many rural areas with only 14 to 18 hours of electricity a day. Although the region has access to power, it lacks the uninterrupted, industrial-grade supply that data centres require.
Building water- and power-intensive facilities before those constraints are addressed would only add to the pressure.
That does not mean either region lacks economic potential. On the contrary, both have begun attracting investment, but through a different model.
Recent industrial projects in Bundelkhand and Purvanchal had land assembled through a development authority, an anchor investor to attract others, and transport links that make manufacturing viable. Subsidies have not been the deciding factor.
Jhansi, in Bundelkhand, is the clearest example of this phenomenon. Bharat Dynamics Limited became the anchor tenant for the Defence Industrial Corridor, while the 296-kilometre Bundelkhand Expressway sharply improved connectivity by cutting the Delhi-Chitrakoot journey from about 14 hours to eight.
By March 2026, Jhansi had attracted Rs 11,738 crore in investment proposals, making it the corridor’s second-best-performing node after Kanpur, despite starting with a much smaller industrial base than some other cities in the region.
The state has since adopted this approach more systematically. It created the Bundelkhand Industrial Development Authority (BIDA) in September 2023 to assemble large land parcels, much as Noida once did.
BIDA has already begun putting that model into practice. By March 2026, it had acquired more than 24,000 acres—about two-thirds of the land needed for its first phase—and lined up early projects including a Rs 600-crore investment from Bharat Earth Movers Limited and a battle-tank maintenance facility. The groundwork is being laid before asking private industry to follow.
Purvanchal tells the same story. The Gorakhpur Industrial Development Authority attracted Rs 11,618 crore across 497 units in the eight years after 2017, compared with just Rs 29 crore across two units in the previous five years. The change coincided with the Gorakhpur Link Expressway and the Purvanchal Expressway, not with changes in subsidies. Greater GIDA is now expanding across 6,876 acres, with its first plots already allotted to industry. The lesson is the same as in Bundelkhand: investment followed infrastructure and industrial planning, not larger incentives.
Indeed, private investment is no longer concentrated almost entirely in Noida and Greater Noida. Purvanchal now accounts for around 28 to 30 per cent of implemented private investment in the state, while Bundelkhand accounts for 6 to 7 per cent.
Those shares remain modest, but they mark a significant shift for regions that until recently attracted very little private industry.
A data centre does not fit the development model that has worked in Bundelkhand and Purvanchal. Unlike a manufacturing plant, it does not anchor a wider industrial ecosystem or generate large numbers of jobs once construction is over. What it does require is a reliable supply of electricity and water—the two resources these regions are still struggling to provide at scale.
It could be argued that the subsidy is harmless because it costs the government very little. It could also be argued that the timing is right. New expressways have improved connectivity, the Ken-Betwa river-link project is expected to be completed by 2030, and solar capacity in Bundelkhand is expanding rapidly. Perhaps these investments will eventually make the region attractive for data centres.
The problem is that none of this infrastructure was built with data centres in mind. The Ken-Betwa project is meant to supply irrigation and drinking water to around 62 lakh people, not industrial cooling systems. Bundelkhand’s solar parks feed electricity into the state grid; they are not dedicated power sources for hyperscale computing campuses.
This criticism however should not be confused to be a verdict on the entire Data Centre Policy 2026. It is confined to one clause. Outside this clause, the policy shows that the government understands where the industry is heading. It updates incentives for AI-era computing and, unlike the 2021 policy, recognises that water cannot be treated as an unlimited resource.
The regional land subsidy is the one major provision that sits uneasily with the rest of an otherwise well-designed policy.
The contrast is visible in another policy approved the same day. The Startup Policy 2026 gives Bundelkhand and Purvanchal extra support because startups need what these regions can already provide: office space, internet and talent. Data centres need that and much more.
