India's edge data centre capacity is predicted to triple by 2027, reaching between 200 and 210 megawatts (MW), according to a recent report by ICRA, a credit rating agency. This represents a considerable increase from the current estimated capacity of 60 to 70 MW, and is propelled by rising demand for low-latency data processing and the quick spread of technologies like 5G, Internet of Things (IoT), augmented and virtual reality (AR/VR), and generative AI.

Edge data centres are smaller, decentralised facilities strategically located closer to end-users, often in tier II and III cities, 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, edge data centres currently account for only about 5% of India's total data centre capacity. However, their share is expected to rise to nearly 8% by 2027 as demand surges across sectors such as healthcare, manufacturing, banking, and defence.

Globally, edge data centres comprise roughly 10% of the 50-gigawatt total data centre capacity as of December 2024. The United States leads the edge data centre market, holding a 44% share, followed by the EMEA (Europe, the Middle East and Africa) region at 32% and the Asia-Pacific at 24%. India remains relatively underpenetrated in this space, with edge facilities accounting for just 1% of the total capacity, excluding captive in-house infrastructure.

ICRA's report emphasizes 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, traditional data centres will keep fueling mass-scale computing, artificial intelligence (AI), and cloud workloads, and edge data centres will facilitate real-time processing and localised services. Traditional and edge data centres are expected to operate in the hub-and-spoke model to enhance efficiencies across sectors such as healthcare, banking, agriculture, defence, and manufacturing.

Despite the promising outlook, some of the key challenges for edge data centres include security vulnerabilities due to remote deployments (majorly in tier II and tier III cities), rapid technological changes that risk obsolescence, a shortage of skilled professionals in remote areas, and interoperability issues with traditional data centres.