Silicon Valley Bets Billions on India

IN OCTOBER, WHEN Google announced that it was investing US$15 billion in India for an artificial intelligence (AI) data centre, it was a signal of India becoming part of the ecosys­tem that would define the future. This week, it became clear that if anything that moment did not really show the scale of what was going to unfold. In quick succes­sion, Microsoft and Amazon separately announced their investment plans into the country, and the total amount involved was a staggering $50 billion. Within just a couple of months, India, thought to be a laggard in the AI infra­structure race, had the map of the future being laid down.

On December 9, Microsoft revealed that it was putting in $17.5 billion into India. This would be spread from 2026 to 2029 and cover AI and cloud infrastructure, and existing operations. Earlier in January, the company had announced a $3 billion invest­ment for 2026. Altogether, therefore, it was putting in $20 billion. The news came with the company’s CEO, Satya Nadella, meeting Prime Minister Narendra Modi. Soon after, Nadella posted on X, “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.” Modi replied from his account, “When it comes to AI, the world is optimistic about India!”

A day later, on December 10, there was a bigger number dropping. Amazon, at its Amazon Smbhav Summit in New Delhi, said that it would be investing $35 billion up to 2030, much of it tagged to AI, like making 15 million small businesses benefit from the technology. Its website said, “These investments are strategically aligned with India’s national priorities and will focus on expanding AI capabilities, enhancing logis­tics infrastructure, support­ing small business growth and creating jobs.” It quoted Amit Agarwal, its Senior VP Emerging Markets, saying, “Looking ahead to 2030, we’re excited to continue being a catalyst for India’s growth, as we democratise access to AI for millions of Indians and qua­druple cumula­tive ecommerce exports enabled to $80 billion. In 2030, Amazon businesses will support 3.8 million direct, indirect, induced and seasonal jobs.”

Google’s AI hub, mean­while, will come up in Visakhapatnam, and its $15 billion investment will also be by 2030. It will not just spruce up the company’s own expansion but translate into enormous economic returns. It said in a note, “According to an analysis conducted by Access Partnership and com­missioned by Google, the AI hub is expected to generate at least $15 billion (USD) over five years (2026-2030) in American gross domestic product (GDP) because of new economic activity from increased cloud and AI adoption, as well as the American talent and resources involved in developing and operating the AI hub.”

Besides these three, other multinationals related to AI are eyeing India as a place to invest in and grow from. In September, OpenAI, the company behind ChatGPT, still the biggest one in terms of number of users, had said that it was going to establish a data centre in the country. It has an ambitious $500 billion project to build infrastructure across the globe, and India is one of the key markets it has identified. In August, its CEO, Sam Altman, had announced the setting up of an Indian office later in the year and posted on X, “AI adoption in India has been amazing to watch—ChatGPT users grew 4x in the past year—and we are excited to invest much more in India!”

YET ANOTHER com­pany participating in India’s AI infrastructure is Intel, which has a tie-up with Tata Electronics for manufac­turing chips. On December 8, the two companies signed a memorandum of under­standing to make Intel prod­ucts for local markets. Intel’s CEO, Lip-Bu Tan, was quoted saying in their press release, “We see this as a tremendous opportunity to collaborate with Tata to rapidly scale in one of the world’s fastest-grow­ing compute markets, fueled by rising PC demand and rapid AI adoption across India.”

The reasons for all these in­vestments flowing into India range from the commercial to the geopolitical. AI is a nascent technol­ogy, and the multina­tionals leading this sector are right now establish­ing market share. India, with its population and mobile penetration, will soon supply a major chunk of consumers from whom monetisation will happen. There are close to a billion internet users in the country, all of them potential users of AI. Not just individu­als, Indian companies will also be straddling the technology. India is one of the fastest-growing major economies in the world, and not being pres­ent in that trajectory would be a great handicap for the future for companies running the AI race.

Secondly, the government is keen on making AI central to its policies. There are incen­tives that make it welcom­ing for companies to invest in India, and not just at the central level. Andhra Pradesh rolled out the red carpet to Google for its Visakhapatnam data centre. It got land at heavily discounted rates and reimbursement of state GST. Altogether, the incentives were said to have totalled `22,000 crore. India is also a much cheaper place to set up operations that can then be used to cater globally, as many of these companies are plan­ning. It has a young and large English-speaking demog­raphy that can be trained to become the workforce.

A key reason why India can’t be ignored is the increasing tension between China and the US. For many decades, the two countries complemented each other commercially. China was the manufactur­ing base that allowed US companies their huge profit margins and growth. But with China too on its way to becoming a superpower, the US is trying to contain it. The election of Donald Trump as president and his imposi­tion of tariffs led China to retaliate by blocking supply of essential rare earths. There is a trade war brewing. US multinationals need options beyond China. India becomes a natural choice for de-risking. Although the US has imposed steep tariffs on India too, the strain in relations is consid­ered temporary till a deal is worked out, whereas with China it is a perma­nent fracture given the factors underlying it.

A Niti Aayog report ‘AI For Viksit Bharat’, released in September, estimated that AI could add $1.7 trillion to the Indian economy. With the scale of investments coming in, the world has begun to bet big on India’s AI future and this is only the beginning.