India's Data Centre Market: Mumbai's Cost Advantage and Future Potential
India is emerging as a top destination for data centre investment, with Mumbai ranking as the second-lowest-cost region globally for data centre construction. The country's strategic advantages and massive market potential are driving significant investment.
Data CentreConstruction CostsMumbaiInvestmentReal EstateReal Estate MumbaiNov 10, 2025
The report states that Mumbai's data centre construction cost is just USD 6.64 per watt, positioning the city 51st out of 52 global markets assessed. This ranking is based on the cost per watt to build data centres, with 1st rank representing the highest construction costs and 52nd the lowest. Thus, Mumbai's 51st position indicates it is the second most cost-effective city in the world for data centre construction, offering significantly lower costs compared to most other markets.
This low-cost environment gives India a strategic edge for investment, substantially lower than other major hubs such as Tokyo, Singapore, and Zurich, where costs per watt are at least twice as high. Mumbai also benefits from a cheaper electricity tariff at 6.71 US cents/kWh, which is over 50 per cent lower than Shanghai, further improving its operational cost base.
India produces 20 per cent of the world's data but has only 3 per cent of global data centre capacity, highlighting critical reliance on foreign hosting and signalling massive domestic market expansion potential. India, alongside Japan and Singapore, is already among the largest data centre markets in the Asia-Pacific region after Mainland China. Estimates say India will require an investment of USD 156 billion for regional buildout.
"India sits at a crucial global inflection point, with markets like Mumbai offering a potent combination of competitive construction costs, ranked the second lowest globally, and a massive projected market opportunity, with an estimated USD 156 billion required for regional buildout. This low-cost base provides India with a salient advantage for data centre investment," Sumit Mukherjee, Managing Director for Real Estate in Asia at Turner & Townsend, said.
Despite the cost advantage, securing reliable power and strengthening supply chains remain major hurdles. An analysis of the current cost per watt to build data centres across 52 global markets shows an average cost inflation of 5.5 per cent in 2025.
The report recommends that clients reassess their procurement strategies to reinforce supply chains and facilitate the rapid deployment of AI data centres. It also highlights the need for innovation to create and implement more energy-efficient designs and to reduce the risks associated with power connection delays.
"To fully capture the benefits of the AI transformation, developers must urgently prioritise securing reliable power and water availability, and strategically strengthen supply chains to deliver the advanced cooling technologies. The market's rapid expansion is driven by strong demand for high-density, GPU-optimised facilities, making decisive action on innovative cooling and energy-efficient designs absolutely critical now," Mukherjee said.
Frequently Asked Questions
Why is Mumbai considered one of the most cost-effective cities for data centre construction?
Mumbai ranks as the second-lowest-cost region globally for data centre construction, with a cost of just USD 6.64 per watt. This is significantly lower compared to other major hubs like Tokyo, Singapore, and Zurich.
What are the key advantages of Mumbai for data centre investment?
Mumbai offers competitive construction costs, a cheaper electricity tariff, and a strategic location in the Asia-Pacific region, making it an attractive market for data centre investment.
What is the estimated investment required for India's data centre market expansion?
India is expected to require an investment of USD 156 billion for regional buildout, driven by strong demand for high-density, GPU-optimised facilities.
What are the main challenges in the data centre market in India?
Securing reliable power and strengthening supply chains are the main challenges. There is a need for more energy-efficient designs and innovative cooling technologies to address these issues.
How does India's data production compare to its data centre capacity?
India produces 20 per cent of the world's data but has only 3 per cent of global data centre capacity, indicating a significant reliance on foreign hosting and a large potential for domestic market expansion.
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