Tier II and Tier III cities driving next wave of digital and AI infrastructure growth: IDC

West and South India together accounted for over 89% of the country’s server demand and 77% of storage revenues in 3Q2025, driven by continued investments from hyperscalers and domestic data center providers, according to IDC’s India Quarterly City-Level Server Tracker and India Quarterly City-Level Storage Tracker. At the same time, rising adoption of cloud, AI, and edge computing is accelerating infrastructure deployments beyond major metros into Tier II and Tier III cities, signaling a shift toward more distributed, regionally deployed digital infrastructure across India.

While infrastructure demand remains concentrated in a handful of large metro markets, enterprise activity across manufacturing, BFSI, healthcare, e-commerce, media, education, and government sectors is steadily expanding into Tier II and Tier III cities. As workloads become more data-intensive and latency-sensitive, enterprises are increasingly deploying regional and edge infrastructure to support digital services closer to end users. This shift is prompting ...