Data-center law in India

Environment (Protection) Act, 1986 (No. 29 of 1986), ss. 3, 5, 15

Effective 1986-11-19 · Applies to both

Section 3 gives the Central Government general power to take measures it considers necessary to protect and improve the environment, including laying down standards for the discharge of pollutants and restricting an area's use for an industry or process. Section 5 lets the Central Government issue binding written directions to any person, officer or authority notwithstanding any other law.

Section 15, as substituted in 2023, makes contravening any provision of the Act, or a rule, order or direction issued under it, for which no other penalty is provided, liable to a penalty of not less than ten thousand rupees and up to fifteen lakh rupees for each contravention, plus an additional penalty of ten thousand rupees for every day a contravention continues, adjudicated by an adjudicating officer rather than prosecuted as a crime. The Act commenced on 19 November 1986.

Source: Full text of law

Environmental Impact Assessment Notification, 2006 (S.O. 1533(E), dated 14 September 2006), paras 1-2 and Schedule items 1(d) and 8(a)

Effective 2006-09-14 · Applies to both

Issued under section 3(2) of the Environment (Protection) Act, 1986, this notification requires prior environmental clearance before construction work or land preparation starts on a new project or activity, or an expansion or modernisation of an existing one, listed in its Schedule and crossing the Schedule's capacity thresholds.

Clearance for a Category A project comes from the Central Government's Ministry of Environment, Forest and Climate Change through an Expert Appraisal Committee; clearance for a Category B project comes from the State or Union Territory Environment Impact Assessment Authority. A Category B project is treated as Category A if it lies wholly or partly within 10 kilometres of a protected area, a critically polluted area, a notified eco-sensitive area, or an inter-State or international boundary.

Schedule item 1(d) places a coal, lignite, naphtha or gas based thermal power plant of 500 megawatts or more capacity in Category A, with a smaller plant on the same fuels falling in Category B under a lower capacity threshold the Schedule sets separately; this item is the closest scheduled category to a data centre's own large-scale captive or backup generation.

Schedule item 8(a) requires clearance for a building or construction project with a built-up area over 20,000 square metres, a threshold a large data-centre building can reach on its own construction footprint. The notification has been amended many times since 2006, with the individual amendments not catalogued here.

Source: Full text of law

Electricity Act, 2003 (Act No. 36 of 2003), ss. 7, 9, 10, 12, 42

Applies to both

Section 7 lets any generating company establish, operate and maintain a generating station without obtaining a licence under the Act if it complies with the technical standards for connectivity to the grid. Section 9 separately lets any person construct, maintain or operate a captive generating plant and dedicated transmission lines.

A person who has constructed such a plant has the right to open access to carry the electricity from it to the destination of its own use, subject to available transmission capacity. Section 10 makes it a generating company's duty to establish, operate and maintain its generating stations and connected lines, and lets it supply electricity to a licensee or, subject to regulations under section 42(2), to a consumer directly.

Section 12 confines the licensing requirement under Part IV to transmitting, distributing or trading in electricity, none of which reaches a generating company acting only as a generator.

Section 42 requires a distribution licensee to introduce open access in phases the State Commission specifies, letting a consumer receive electricity from a generating company or another licensee over the distribution licensee's wires, on payment of wheeling charges and, before cross-subsidies are eliminated, a surcharge; that surcharge is not chargeable to a person carrying electricity from its own captive generating plant. No dated commencement notice for this Act has been located in the available text.

Source: Full text of law

Energy Conservation Act 2001 (Act No. 52 of 2001), s. 14, as amended by the Energy Conservation (Amendment) Act, 2022 (Act No. 19 of 2022), ss. 2, 6, 8, 12

Applies to both

Section 14 lets the Central Government notify any user or class of users of energy, having regard to the quantity of energy it consumes and the investment needed to switch to more efficient equipment, as a designated consumer. Once notified, a designated consumer must meet the energy consumption norms and standards the Central Government establishes for it, conduct an energy audit, appoint an energy manager, and report on its energy consumption.

A sufficiently large data centre could be notified as a designated consumer under this power. The Energy Conservation (Amendment) Act, 2022 added a carbon credit trading scheme the Central Government specifies under section 14(w), under which a registered entity, including a designated consumer, may be issued a carbon credit certificate and may buy or sell it. The 2022 Act separately added a power to specify a minimum share of consumption of non-fossil energy sources for designated consumers.

The 2022 Act also substituted section 26's penalty: a person who fails to comply with the energy-audit, energy-manager, reporting or energy-consumption-norms duties of section 14, or the corresponding building-code duties of section 15, is liable to a penalty of up to ten lakh rupees, plus an additional penalty of up to ten thousand rupees for every day the failure continues. No dated commencement notice has been located in the available text for either the principal Act or the 2022 amendment.

Source: Full text of law

Special Economic Zones Act, 2005 (Act No. 28 of 2005), ss. 7, 13, 15

Effective 2006-02-10 · Applies to both

Section 15 lets any person who intends to set up a Unit for carrying on authorised operations in a notified Special Economic Zone submit a proposal to the Development Commissioner, who refers it to the Approval Committee constituted under section 13 for that zone; the Approval Committee may approve, approve with conditions, or reject the proposal, with an appeal to the Board of Approval.

Section 7 exempts goods or services a Unit or a Developer exports out of, imports into, or procures from the Domestic Tariff Area from the taxes, duties or cess otherwise chargeable under the enactments listed in the Act's First Schedule, subject to prescribed terms, conditions and limitations.

A data centre could seek to operate as a Unit inside a notified zone under this single-window approval route to obtain that exemption; the Act does not name a data centre or information-technology facility as a distinct category of Unit. Sections 1, 2, 7, 13 and 15 commenced on 10 February 2006.

Source: Full text of law