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India has positioned itself as a leading destination for data centre investments, with Mumbai recognised as one of the world's most cost-effective cities for such developments, according to the latest Turner & Townsend Data Centre Construction Cost Index. The report placed Mumbai 51st among 52 global markets, with construction costs at just USD 6.64 per watt. The city also benefits from low electricity tariffs, further enhancing its operational efficiency. Despite this cost advantage, challenges such as reliable power supply and resilient supply chains remain key concerns for sustained growth.
India has gained prominence as a preferred global destination for data centre investments, with Mumbai ranking among the world's most affordable cities for data centre construction, as highlighted in the Turner & Townsend Data Centre Construction Cost Index released earlier this week. The report found that Mumbai's data centre construction cost stands at USD 6.64 per watt, placing the city 51st out of 52 markets evaluated globally. Advertisement
The ranking is determined by the cost per watt of building data centres, where the 1st position denotes the highest costs and the 52nd represents the lowest. Mumbai's near-bottom position indicates that it is the second most cost-efficient city worldwide for data centre development, offering substantially lower costs than other leading markets.
This cost advantage strengthens India's strategic investment appeal, making it far more affordable than global hubs such as Tokyo, Singapore, and Zurich, where construction costs per watt are reportedly at least double. Moreover, Mumbai's electricity tariff, at 6.71 US cents per kWh, is over 50 per cent lower than that of Shanghai, further boosting its operational competitiveness.
While India generates about 20 per cent of the world's data, it hosts only around 3 per cent of global data centre capacity, underscoring its heavy dependence on overseas hosting and the substantial scope for domestic expansion. Alongside Japan and Singapore, India already ranks among the largest data centre markets in the Asia-Pacific region after Mainland China. Industry estimates suggest the country will require an investment of about USD 156 billion to meet regional development needs.
Sumit Mukherjee, Managing Director for Real Estate in Asia at Turner & Townsend, stated that India occupies a pivotal position in the global data centre landscape. He explained that markets such as Mumbai combine competitive construction costs-among the world's lowest- with immense market potential, which together grant India a powerful advantage for future investment.
However, the report also identified challenges, particularly in securing dependable power supply and enhancing supply chain efficiency. The analysis found that the average cost inflation for data centre construction across 52 global markets is expected to be around 5.5 per cent in 2025.
The study recommended that investors and developers revisit their procurement approaches to reinforce supply chains and facilitate the rapid rollout of AI-focused data centres. It further urged the adoption of innovative and energy-efficient designs to minimise the risks associated with power connection delays. Mukherjee noted that to capitalise fully on the AI-driven transformation, developers must prioritise power and water reliability while embracing advanced cooling technologies that support high-density, GPU-optimised facilities.
With its low construction and operational costs, Mumbai has emerged as a compelling global destination for data centre investments. The city's affordability, combined with India's expanding digital ecosystem, offers significant potential for industry growth. However, the sector's progress will depend on addressing infrastructure gaps, ensuring reliable power access, and strengthening supply chain resilience. As India prepares for a surge in AI-enabled data centres, industry stakeholders will need to adopt innovative and sustainable solutions to maintain the country's competitive advantage in the global data infrastructure landscape.
Source - PTI
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