The infrastructure revolution no one saw coming: Tier II cities lead the edge

For years, discussions about India’s digital infrastructure have revolved around the metro cities—Mumbai, Chennai, Bengaluru, Delhi-NCR. It was a logical approach to build where the connectivity, capital, and demand is. This approach is now shifting.

The assumption that digital infrastructure naturally follows the metros to smaller cities, that the edge is something to be deployed or shipped, fundamentally misunderstands the reality of what is happening in India. Cities like Jaipur, Coimbatore, Visakhapatnam, Ahmedabad, Nagpur, and Kochi are not waiting for the edge to be deployed. They are generating the conditions that define it.

Metro-centric model is showing its limits

The numbers tell a clear story. According to KPMG, Mumbai and Chennai together account for over 70% of India’s current data centre capacity with Mumbai-Navi Mumbai alone holding a dominant share. This concentration made sense when digital consumption was similarly concentrated. That era has passed.

A TRAI report reveals that India's total broadband subscriptions crossed 969.10 million in March 2025 with per capita data usage reaching 36 GB per month by end-2025, making India the global leader in this metric. Critically, this consumption is no longer exclusive to metro areas. It is distributed, granular, and becoming more sensitive to latency. The round-trip to a Mumbai data centre is no longer feasible when a factory in Coimbatore implements predictive maintenance on the shop floor or a logistics operator in Nagpur performs real-time route optimisation. There is no negotiation in the physics of latency.

This is where edge data centres come to play. They are typically defined as smaller, decentralised facilities strategically located closer to the end users and devices they serve. They are purpose-built to deliver the lowest latency with highest performance.

What is actually driving tier II growth

There are two forces that are reshaping the demand map. The first is the expansion of digital manufacturing and logistics. India’s PLI schemes and the push towards industrial decentralisation are creating genuine compute demand in non-metro geographies. Smart factory deployments, warehouse automation, supply chain visibility platforms aren’t workloads that can afford to backhaul data hundreds of kilometres for processing.

The second is the deepening of consumer digital services. India’s Smart Cities Mission, encompassing 100 cities, is generating substantial demand for localised data processing to enable real-time responsiveness in traffic management, public safety, and utility networks. These cities aren’t aspirationally digital. They are operationally digital, right now, and their infrastructure requirements reflect that reality.

Nxtra, Airtel’s data centre arm, already operates 120 edge data centres across 65 cities including Bhopal, Nagpur, Cuttack, Ranchi, Patna, and Raipur, with capacities ranging from 1 to 5 MW. This infrastructure is already serving live demands.

Why Tier II Cities Are the Edge, Not Just Edge Candidates

Edge computing is defined not by geography but by function: processing data close to where it is generated, minimising latency, and enabling real-time decision-making. By that definition, a Tier II city with active industrial IoT deployments, a smart city network, and a growing BFSI base isn’t a candidate for edge infrastructure. It already is edge infrastructure, just without the right physical layer to support it.

As per a report by investment bank Houlihan Lokey, India’s edge data centre capacity is expected to grow from around 70 MW in 2025 to 300-400 MW by 2030, driven by 5G and IoT demand. The trajectory isn’t driven by operators deciding to expand geographically. It is driven by workloads that are already there and cannot be served from a distance.

Infrastructure gap, and why it matters

Here’s where the conversation becomes uncomfortable. The demand is real in Tier II cities, but the infrastructure to support that demand is not yet adequate. The problems are well understood—lack of local vendor base, limitations in power grid reliability, fewer people with operational skills, and longer equipment procurement cycles.

This is not an argument for slowing down. It is an argument for rethinking how we build.

The metro model, which is large, customised, capex-heavy, and has multi-year delivery cycles cannot be replicated in each city across India’s secondary markets. The economics don’t work, and the cycles don’t fit. What Tier II deployments require is operational simplicity: infrastructure that can be deployed quickly and operated by lean teams that can be managed remotely.

Design philosophy, not reduced capability

This is a point worth making clearly, because it is frequently misunderstood. Edge infrastructure in Tier II cities is not a smaller, cheaper version of a metro data centre. It is a differently architected one with modular power and cooling systems, standardised form factors that reduce on-site engineering complexity, integrated DCIM that enables remote visibility, and prefabricated designs that compress deployment timelines from months to weeks.

The capability requirements, uptime, power protection, thermal management, monitoring are identical. What changes is the delivery model. Modular, standardised infrastructure that ships as a system and deploys with precision is not a compromise. It is the right answer for this environment.

Not the future, the present

Many organisations are announcing land acquisition in Tier II cities for their second edge data centres. For e.g. CtrlS announced land acquisition in Patna with an investment of `400 crore, as part of its plan to establish over 20 edge data centres across Tier II and Tier III cities. In January 2025, Sify Technologies announced a $5-billion investment to expand AI data centres, planning 20 smaller AI inference facilities across secondary cities to meet growing enterprise demand.

The required investments and workloads are already there. Infrastructure providers need to ask themselves: Are we still building for the India of the past or the one that has already moved ahead of us? Tier II cities are not waiting for the edge. They have become it. Our job is to catch up.

(The author is VP, APAC, Data Center- White Space, Legrand Data Centre Solutions. Views are personal.)