A slogan related to Artificial Intelligence (AI) is displayed on a screen in the Intel pavilion during the 54th annual meeting of the World Economic Forum in Davos, Switzerland, Jan. 16, 2024.
Denis Balibouse | Reuters
Big‑tech firms are accelerating their multi‑billion‑dollar bets in India, drawn by a combination of abundant real‑estate for data centers, a deep talent pool, and a rapidly expanding digital user base.
Within a 24‑hour window, Microsoft and Amazon together pledged more than $50 billion toward India’s cloud and AI infrastructure. Intel, meanwhile, announced plans to start chip production in the country to capture the surging demand for PCs and AI‑enabled devices.
Although India currently lags behind the United States and China in building a home‑grown foundational AI model—and it does not yet host a large domestic AI‑infrastructure player—it is leveraging its long‑standing expertise in information‑technology services to develop and deploy enterprise‑grade AI applications. That creates a fertile market for the world’s biggest tech firms.
“Having a model or raw compute capacity is only half the story,” said S. Krishnan, secretary of India’s Ministry of Electronics and Information Technology. “Enterprises need a robust application layer and a large, skilled workforce to operationalize AI.”
Stanford University’s AI Index ranks India among the top four nations—alongside the U.S., China and the U.K.—for overall AI vibrancy. Meanwhile, GitHub reports that Indian developers contribute roughly 24 % of all global open‑source projects, a testament to the country’s deep engineering talent.
Krishnan added that India’s comparative advantage lies in “building AI‑driven applications that generate revenue for AI vendors,” rather than solely developing the underlying models.
On Tuesday, Microsoft unveiled a $17.5 billion, four‑year investment plan aimed at expanding hyperscale infrastructure, embedding AI into national platforms, and upskilling the Indian workforce.
“This level of capex gives Microsoft a first‑mover advantage in GPU‑rich data centers and positions Azure as the default platform for India’s AI workloads,” said Tarun Pathak, research director at Counterpoint Research.
Amazon followed on Wednesday with a commitment of over $35 billion—on top of the $40 billion it has already invested in the country.
In recent months, AI‑focused firms such as OpenAI, Google, and Perplexity have offered free access to their tools for millions of Indian users. Google has also confirmed a $15 billion investment to build a new AI hub in southern India, further expanding the nation’s data‑center capacity.
“India’s massive digital user base, rapidly growing cloud and AI demand, and high‑skill IT ecosystem make it more than a consumer market—it is becoming an engineering and deployment hub,” Pathak noted.
Data‑center opportunity
India enjoys several structural advantages for data‑center development. While neighboring markets such as Japan, Australia, China and Singapore have approached saturation, Singapore’s limited land supply constrains new large‑scale builds.
By contrast, India offers ample space for sprawling facilities. Power costs are relatively low compared with European hubs, and the nation’s expanding renewable‑energy portfolio—critical for the power‑intensive needs of AI workloads—improves the economics of large‑scale deployments.
Domestic demand is being propelled by e‑commerce growth, a historic driver of data‑center expansion, and by emerging regulations that may require social‑media data to be stored locally.
In short, India is hitting a “sweet spot” where global cloud providers, AI players, and domestic digitalization converge, creating what analysts describe as one of the world’s hottest data‑center markets.
“India is a pivotal market and one of the fastest‑growing regions for AI spending in Asia‑Pacific,” said Deepika Giri, associate vice president and head of research, big data & AI, at IDC.
She added, “A major gap—and therefore a significant opportunity—lies in the shortage of suitable compute infrastructure for running AI models.” Big‑tech firms are scrambling to fill that gap by investing heavily in cloud and data‑center capacity.
Global operators are increasingly locating new facilities closer to India’s IT corridors—Bangalore, Hyderabad and Pune—rather than traditional coastal landing‑point cities like Mumbai and Chennai. This shift reflects a strategic move to serve both domestic and international customers from near‑shore locations.
— CNBC’s Dylan Butts, Amitoj Singh contributed to this report.
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