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India is forging ahead with ambitions to become a major artificial intelligence hub as it prepares to pour billions of dollars into the country's computing infrastructure as big tech companies such as Microsoft Corp and Amazon compete for dominance in the fast-growing industry.
Indian authorities are offering incentives to technology companies in everything from electronics manufacturing to data storage, hoping that a burgeoning domestic tech market and a vast pool of skilled workers can help the country become a major consumer and exporter of AI.
Microsoft is investing about $3.7 billion in the southern Indian state of Telangana, local officials have announced. The tech giant is acquiring land in India to build data centers that will add 660 megawatts of IT capacity, according to Structure Research, equivalent to the annual electricity needs of about 500,000 European homes.
Meanwhile, Amazon plans to invest around $12.7 billion in cloud infrastructure in India by 2030.
“India is one of the most exciting markets in the world right now for technology,” Puneet Chandhok, Microsoft's president for India and South Asia, told the Financial Times. “We will continue to build capabilities in the region to serve customers who are innovating both in India and globally.”
Big tech companies are rushing to ramp up cloud-computing capacity as they race to dominate generative AI, with Microsoft, Amazon and Google announcing plans this year to invest a combined total of at least $85 billion in data centers and other infrastructure in countries including Singapore, the United States, Saudi Arabia and Japan.
Companies are rushing to build their own data centers in India, which is expected to propel the country from sixth to the top spot in Asia-Pacific in terms of self-constructed capacity, according to Structure Research, which estimates do not include data center capacity built in the region by third parties that lease facilities to large tech companies and other businesses.
If Microsoft goes ahead with building 660MW of new capacity in India, it would become the company's largest market for self-built data centers outside the U.S., according to Structure data. Microsoft declined to comment on financial or capacity figures.
Other countries expected to become hotspots for data center expansion in the near future are Germany and the United States, which includes Northern Virginia, the world's largest data center market, according to industry research groups Structure, Telegeography and Dgtl Infrastructure.
The concept of “sovereign AI” has spurred calls among governments for domestic data centers, analysts say, as authorities are eager to ensure sensitive information is stored and processed within their borders and to develop their own AI systems and tools.
Jabez Tan, research director at Structure, said that as the government “looks to build AI applications that are focused on defence, military and national security”, “this needs to be done domestically”.
Tan said pressure from countries with fast-growing economies had created a “big market” for cloud providers such as Microsoft and Amazon.
Indian authorities have lured tech companies to states, including Telangana, with billions of dollars in incentives, and the country's digital economy is growing rapidly thanks to widespread smartphone use and cheap data.
India is already Microsoft's largest research and development base outside the U.S. About two-thirds of the tech giant's 23,000 employees in the country are engineers, many of whom are based in Hyderabad, the capital of Telangana state. The company says a quarter of AI projects on GitHub, its proprietary development platform, are run in India.
But the proliferation of data centers, which require huge amounts of electricity and water to operate, can put a huge strain on the environment. India is one of the world's most water-scarce countries, and despite rapid investment in renewable energy, most of its generating capacity still comes from coal.
Chandhok said Microsoft's expansion plans won't affect the company's goal of becoming carbon negative by 2030. The company has deals in India to procure clean electricity from renewable energy companies, including ReNew.
