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India is emerging as a competitive destination for data centre investments, with Mumbai ranking among the world's most cost-effective locations for data centre construction, giving the country an advantage over major Asian markets such as Singapore and Tokyo, according to a KPMG report.
The report said Mumbai ranks as the world's second most cost-effective location for data centre construction, with construction costs in Singapore and Tokyo nearly double those in Mumbai. India has a clear edge over other major commercial markets such as Singapore and Tokyo where the costs are nearly double that of Mumbai, the report said. India's cost advantage comes at a time when demand for data centre capacity is rising rapidly, driven by cloud computing, streaming, artificial intelligence and the expansion of digital services. According to KPMG, annual data centre capacity additions in India increased around 2.4 times, rising from about 778 MW in FY23 to nearly 1,900 MW in FY26. The sharp increase reflects long-term capacity commitments by hyperscale cloud providers, with new capacity being added in phases. The report said India offers a combination of cost efficiency, availability of land and power at scale, and an improving infrastructure network that can support long-term capacity expansion. Unlike other markets, India offers a unique combination of cost efficiency, availability of land and power at scale, and a rapidly improving infrastructure network that can support long-term capacity ramp-up, KPMG said. India's relatively low power costs and expanding renewable energy capacity are also adding to its attractiveness for data centre operators. The country had reached 500 GW of total installed power capacity by mid-2025, with around 50 per cent of the capacity coming from renewable sources. KPMG said the country's large and cost-efficient technology talent pool further strengthens its position, with software engineer salaries at around USD 20,000 per year, while AI hiring has been growing at around 33 per cent year-on-year. The country's data centre market is projected to expand from around USD 1.7 billion in FY26 to USD 6.8 billion by FY30. India's share of global data centre capacity is also expected to rise from around 2-3 per cent in FY26 to nearly 5 per cent by FY30. The report noted that while India's data centre market was historically driven by domestic enterprises, BFSI institutions and telecom operators, the current growth cycle is increasingly being led by hyperscale cloud providers, global content platforms and AI-first companies. India currently generates about one-fifth of global data but hosts only around 2-3 per cent of global data centre capacity, indicating significant room for further expansion, KPMG said. (ANI)
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