Microsoft to spend $17.5B on AI infrastructure to support India’s AI ambitions – News

Microsoft Corp. said today it’s going to invest $17.5 billion into building out its data center and artificial intelligence infrastructure in India, as part of an effort to scale its presence in the South Asian country, which is fast becoming a major battleground for global technology giants.

The investment was announced by Microsoft Chief Executive Satya Nadella (pictured, left) earlier today after he met with Indian Prime Minister Narendra Modi (right) in New Delhi as part of his ongoing tour of the country. He said the investment is focused on the three pillars of “scale, skills and sovereignty,” in alignment with Modi’s ambition to establish a broad tech ecosystem to support innovation in AI.

“To support the country’s ambitions, Microsoft is committing US$17.5B — our largest investment ever in Asia — to help build the infrastructure, skills, and sovereign capabilities needed for India’s AI first future,” Nadella wrote in a post on X.

Nadella, who was born and raised in India before moving to the U.S. as a student and obtaining American citizenship, is planning to visit Indian tech hubs in Bangalore and Mumbai in the coming days. He last visited the country in January, where he pledged to invest $3 billion over the next two years.

The new investment is much bigger, and Microsoft said its priority is to build AI infrastructure that will ensure India has both the sovereignty and security it desires, Nadella said.

As part of the initiative, Microsoft is planning to build a new data center region in the city of Hyderabad that’s expected to be up and running by the middle of next year. It will comprise three availability zones, and its footprint will be about the same size as two Eden Garden stadiums – the largest cricket stadium in India. In addition, Microsoft will also expand its existing data center facilities in Chennai and Pune.

The company is also planning to work closely with the Indian government on a range of projects. For instance, it’s going to work with India’s Ministry of Labour and Employment on the integration of AI into its e-Shram and National Career Service digital platforms, providing automated services to over 310 million workers in the country’s informal economy.

The platforms will tap Microsoft’s Azure OpenAI Service to offer multilingual access and AI-powered job matching, as well as predictive analytics to enable skills and demand trends. The National Career Service also wants to offer automated résumé creation tools and personalized career pathway plans, Microsoft said.

The jewel in the AI crown

India, the most populous nation in the world with more than 1.45 billion inhabitants, has become a magnet for the AI industry’s power brokers this year, in addition to being a major source of data and talent. In October, Anthropic PBC co-founder and CEO Dario Amodei visited the country to set up a local office. Google DeepMind and Nvidia Corp. CEOs Demis Hassabis and Jensen Huang are also planning official visits.

Microsoft’s rivals Google LLC and Amazon Web Services are also focused on expanding their presence in India in an effort to tap into the country’s enormous demand for cloud computing services and AI tools. India is home to some of the world’s biggest companies, including Reliance Industries Ltd., HDFC Bank and Tata Consultancy Services Ltd., as well as hundreds of government agencies and innovative startups that are all thirsty for cloud compute.

Earlier this year, Google unveiled a plan to spend $15 billion on a new AI hub in India. That’s its largest investment in the country to date, and follows a $10 billion pledge it made in 2020.

Big tech companies are drawn to India because of its huge base of internet subscribers and hundreds of millions of smartphone users. The country is also home to a fast-growing startup economy, and India’s digital services push is also increasing demand. OpenAI Group PBC is also setting up a local headquarters in India, and Google and Perplexity AI Inc. have struck partnerships with Indian telecommunications firms Reliance Jio and Bharti Airtel Ltd., respectively, to expand their reach in the country.

The expansion of U.S. tech giants into India is music to the ears of Modi’s government, which is striving to position the nation as a global technology hub and address concerns around data sovereignty and access.

For Microsoft, India represents an important opportunity, but it’s not the only one. The company has funneled billions of dollars to countries all over the world in its pursuit of AI and cloud dominance.

Last month, it said it’s going to spend $10 billion on a new AI data center in Portugal that will cater to users in South West Europe. A week earlier, it committed to spending $7.9 billion on data center projects in the United Arab Emirates. In September, the company said it would invest as much as $30 billion into AI projects and infrastructure in the U.K.

In October, Microsoft forecast its capital expenditures to exceed $97.5 billion in fiscal 2026.

Photo: Satya Nadella/X