India’s edge data centre capacity is expected to witness a threefold jump by 2027, reaching approximately 200 to 210 megawatts (MW), according to a recent report by credit rating agency ICRA. This projected growth marks a significant rise from the current estimated capacity of 60 to 70 MW, driven by increasing demand for low-latency data processing and the rapid proliferation of technologies such as 5G, Internet of Things (IoT), augmented and virtual reality (AR/VR), and generative AI.
Edge data centres are smaller facilities that are strategically located closer to end-users, often in tier II and III towns, to enable faster and more efficient data processing. While traditional data centres handle mass computing and storage workloads, edge centres cater to real-time applications, making them critical for services that require quick response times. According to ICRA, these centres currently account for only about five percent of India’s total data centre capacity. However, their share is expected to rise to nearly eight percent by 2027 as demand surges across sectors such as healthcare, manufacturing, banking, and defence.
Globally, edge data centres comprise roughly ten percent of the 50-gigawatt total data centre capacity as of December 2024. The United States leads the edge data centre market, holding a 44 percent share, followed by the EMEA region at 32 percent and the Asia-Pacific at 24 percent. India remains relatively underpenetrated in this space, with edge facilities accounting for just one percent of the total capacity, excluding captive in-house infrastructure.
ICRA’s report emphasises a complementary hub-and-spoke model, where large-scale data centres in major metros will continue to support high-volume computing, while edge centres will serve the growing need for real-time and decentralised data services. Anupama Reddy, Vice President and Co-Group Head of Corporate Ratings at ICRA, stated that as the cloud ecosystem expands in India, edge infrastructure will play a pivotal role in delivering low-latency, location-specific services while centralised facilities focus on large-scale data workloads.
Despite the optimistic outlook, the edge data centre market faces several challenges. These include data security concerns due to remote and decentralised deployments, the high risk of technology obsolescence, the scarcity of skilled manpower in non-urban areas, and issues related to integration with centralised data centres. Additionally, capital expenditure per megawatt for edge facilities is typically higher compared to traditional data centres. However, this is offset to some extent by higher rental yields, as edge data centres cater to retail and enterprise customers requiring specialised services.
Industry players such as telecom operators and RailTel are expected to play a leading role in expanding edge data infrastructure, leveraging their extensive network footprint and technical capabilities. As digital transformation accelerates and real-time data requirements continue to grow, the development of edge data centres is poised to become a crucial pillar in India’s broader digital infrastructure strategy.
