According to Cushman & Wakefield, India currently offers the lowest power tariffs for data centres, a key factor that could encourage companies to establish data centre hubs in the country. While India saw one of the steepest increases in data centre construction costs in the in the Asia Pacific (APAC) region in 2024, a 5 per cent rise driven by growing land prices, higher demand for power infrastructure, and the need for advanced, artificial intelligence (AI) ready facilities, the country continues to present a competitive investment proposition compared to more mature markets like Japan and Australia.
Power availability has become a crucial factor influencing investment decisions, particularly as several APAC countries face supply shortages and long wait times. In contrast, India’s major data centre hubs, especially Mumbai, benefit from a relatively stable industrial power supply, further enhancing their appeal.
India’s attractiveness is also underpinned by factors such as abundant land and power resources, a growing and skilled contractor base, and relatively low entry costs, all of which are contributing to rising interest in the market.
Further, power expenses form a major portion of operational costs for data centre users. As of November 2024, the average power tariff across the APAC stood at 11.5 cents per kilowatt-hour, translating to an annual cost of $30.2 million to operate a 20-megawatt (MW) IT load at a power usage effectiveness (PUE) of 1.5.
To further boost the sector, several Indian states are offering incentives and subsidies. For instance, under Haryana’s Data Centre Policy, there is a 100 per cent exemption on electricity duty and a 25 per cent rebate on state GST, reducing power costs even further.
India has firmly established itself among the top five data centre markets in the APAC region, with an operational capacity of 1.3 gigawatt (GW) and another 2.7 GW in the pipeline, comprising both under-construction and planned developments.
Further, Mumbai leads the domestic market, boasting 542 MW of live capacity and 335 MW currently being built. The city hosts 48 data centres operated by 17 players and has a colocation vacancy rate of 6 per cent. If fully developed, secured land parcels in the city could support an additional 2 GW of capacity.
At the same time, cities like Delhi, Hyderabad, and Chennai are emerging as high-growth secondary markets, each with the potential to add more than 500 MW of capacity. These cities are drawing considerable investment from both Indian and global entities, driven by enhanced connectivity, policy support, and growing enterprise cloud adoption. Additionally, other cities such as Pune and Bengaluru are also witnessing momentum, supported by strong IT ecosystems and government-led infrastructure initiatives.
