The Andhra Pradesh government has officially cleared Reliance Industries’ proposal to establish a massive data center project in the state, a move that has been under discussion for the past several days. However, despite the company planning to invest more than Rs.1 lakh crore, the project is expected to generate only around 1,000 jobs. Even this figure has not been guaranteed, with the government stating only that there is a possibility of employment opportunities for about 1,000 people. Another major aspect of the project is the huge incentives being extended by the government. According to official orders issued by the Andhra Pradesh IT Department on Wednesday, the state is set to provide incentives worth nearly Rs.19,000 crore for the project.
For the Reliance Data Center project, the government will allocate 855 acres of land at Polipalli village in Vizianagaram district. The company is expected to invest a total of Rs.1,08,010 crore in the proposed Giga-Scale AI Data Center (AIDC) and Cable Landing Station (CLS), according to the orders issued by the IT Department. Despite investments crossing Rs.1 lakh crore, the employment generation from the project is expected to remain limited to just 1,000 jobs. The government order itself mentions this aspect. Even so, the Andhra Pradesh government has decided to offer large-scale incentives to attract the project.
Under Ease of Doing Business (EoDB) rules, the project will receive single-window clearance approvals. The government also stated that a steering committee will oversee the implementation of the project, similar to other major data center projects. The government has proposed a guaranteed water supply arrangement along with a joint ownership model for a desalination plant. Through the Water Resources Department, Municipal Administration Department, and APIIC, the state will ensure water supply to the proposed site for a period of 20 years. The company, however, will bear the related costs. APIIC has also been directed to conduct a detailed study on the joint ownership model for the desalination plant and submit a feasible proposal to the government.
The Reliance Data Center project will receive several financial incentives from the state government. The required land for the project will be allotted to Reliance Industries at a 25% discounted rate. A total of 853.97 acres has been recommended for the project. The Revenue Department has been instructed to transfer the land to APIIC, which will then allot it to the company. The company must pay 75% of the land value once APIIC begins the land acquisition process. Additionally, one acre of land has been recommended for the Cable Landing Station. APIIC and the district administration have been directed to identify suitable land and allot it to the company.
The project will also receive a 100% exemption on stamp duty and registration charges. At the same time, the government will provide a capital subsidy equivalent to 6% of the investment made on machinery and equipment, to be disbursed in 10 equal installments, with a maximum limit of Rs.4,500 crore. The government will also provide SGST reimbursement on construction activities. It will reimburse 100% of the net SGST accrued to the state, with the total incentive capped at Rs.2,527.38 crore. This benefit will remain valid for 10 years or until the project reaches maximum capacity, whichever comes earlier. SGST reimbursement will also be provided on leasing costs. For a period of 10 years, 100% reimbursement of the net SGST accrued to the state will be given, with the total incentive capped at Rs.1,800 crore.
The government will also provide a 15% subsidy on water tariffs for 10 years, with the total incentive limited to Rs.552.41 crore. There will also be concessions on Optical Ground Wire (OPGW) fiber access. A 30% discount on OPGW fiber access charges will be provided for 20 years. Maintenance charges will increase by 5% every three years, and the total incentive under this category has been capped at Rs.1,220.71 crore. The project will also receive a waiver on Right of Way (RoW) charges related to state government agencies for 20 years. The total incentive under this category is limited to Rs.200 crore.
As part of the power tariff subsidy, electricity will be supplied at a discount of Rs.1 per unit for 15 years, with the total incentive capped at Rs.3,114.18 crore. The project will also receive exemption from cross-subsidy surcharge for its captive solar park for 20 years, as per Energy Department norms. The state government has further granted a 100% exemption on transmission and wheeling charges imposed by the Energy Department for 20 years, with the total benefit capped at Rs.5,000 crore. In addition, electricity duty will be fully exempted for 15 years, with the total incentive capped at Rs.186.85 crore. Officials say that if the value of the 25% land discount is also included, the total incentives offered to the Reliance Data Center project could increase even further.