Global Big Tech Converges on India, Emerging as the Next AI Battleground

Microsoft, Google, Amazon Roll Out Successive Hyperscale Projects
World’s No. 2 Digital Market, Low Infrastructure Costs Add to Appeal
Intensifying Competition to Secure Data Centers Amid Robust State Support

India is rapidly ascending as the hyperscale arena for global technology giants. With Microsoft (MS), Google, Amazon, and OpenAI unveiling large-scale cloud and AI infrastructure investments, India has become the fastest-moving destination in Asia for attracting data centers and semiconductor manufacturing facilities. The convergence of a booming digital market, comparatively low development costs, and full-throated government backing is accelerating India’s rise as an “AI mega hub,” analysts say.

MS Announces Largest-Ever Investment Plan in Asia

According to Reuters and Bloomberg on the 10th (local time), MS CEO Satya Nadella—currently visiting India—announced after meeting Prime Minister Narendra Modi that the company will invest a total of $17.5 billion in India’s cloud and AI infrastructure over three years from 2026 to 2029. Nadella, who graduated from Manipal Institute of Technology in India before studying in the United States, posted a photo with Modi on X, emphasizing that MS’s investment “will help build the infrastructure, technology, and sovereign capabilities essential for India’s AI industry.”

The decision comes just 11 months after MS unveiled a separate $3 billion investment in January, marking the company’s largest-ever commitment in Asia. Reuters assessed that the new investment will secure MS the most expansive cloud computing footprint in India. MS plans to expand data centers across major cities including Bengaluru, Hyderabad, and Pune, while adding 22,000 employees. It will also integrate AI capabilities into the Indian Labor Ministry’s systems to enhance job matching, welfare services, and workforce development.

Later that day, Modi also met Intel CEO Lip-Bu Tan. Intel, leveraging Tan’s visit, confirmed that Tata Electronics’ upcoming semiconductor plant in Gujarat will handle production and packaging of Intel chips. The company plans to gradually transfer design technologies and manufacturing processes to the local production line. Immediately after the meeting, Tan posted on X, praising Modi’s “comprehensive semiconductor design and manufacturing policy” and pledging Intel’s full support for India’s semiconductor mission.

U.S. Tech Giants Race to Build AI Data Centers

Experts note that India has become the next strategic battlefield for AI among Big Tech. MS, Amazon Web Services (AWS), and Google have each committed more than $10 billion in investment, driving India’s emergence as a pivotal growth market. AWS, which invested $3.7 billion between 2016 and 2022, has announced plans to inject an additional $12.7 billion into cloud and AI infrastructure in regions including Telangana by 2030. AWS also laid out a roadmap to provide AI tools and training to 15 million small and medium-sized enterprises and 4 million students.

Google, meanwhile, announced in October that it will invest $15 billion over the next five years to build a 1GW AI data center in Andhra Pradesh, marking its largest AI-related investment outside the United States. Google aims to establish its first dedicated AI hub in India to meet surging global demand for digital services. The plan includes construction of subsea cables for data transmission. Alphabet CEO Sundar Pichai said the project will “deliver industry-leading technologies to Indian businesses and users, accelerate AI innovation, and stimulate nationwide growth.”

OpenAI, the developer of ChatGPT, is also pursuing a 1GW-scale data center in India. The project forms part of Stargate, a mega-infrastructure initiative underway with Oracle and SoftBank, following earlier sites in the UAE and Norway. Having secured a foothold in the world’s second-largest internet market after China, OpenAI is negotiating with local data center operators. The planned facility will accommodate more than 59,000 Nvidia B200 chips. The company recently established a corporate entity in New Delhi and is accelerating local hiring.

Abundant Talent and Low Power Costs

A primary driver behind Big Tech’s surging investment is India’s explosive digital growth. Smartphone penetration is rising at one of the fastest rates globally, and internet users surpassed 800 million last year. Average monthly data consumption per capita reached 21.1GB—double the level five years ago. Yet AI infrastructure still lags sharply behind demand. Deloitte noted that while India accounts for 20% of global data generation, it holds only 3% of global data center capacity, adding that Big Tech seeks to capture this rapidly expanding market while the Indian government leverages foreign capital to offset infrastructure deficits.

Low development costs further enhance India’s appeal. The country’s vast land area enables convenient acquisition of large-scale data center sites, and electricity prices are significantly lower than in major English-speaking hubs. India also produces 1.5 million IT professionals annually from domestic engineering institutions, supplying an ample pool of engineers, server specialists, and network technicians essential for data center operations—at competitive labor costs. Meanwhile, steady expansion of subsea cables and national power grids is improving the reliability of communications and electricity—both critical for hyperscale operations. The integration of semiconductor and server manufacturing clusters with cloud and AI industrial zones is also generating supply chain advantages, analysts say.

Government backing has further accelerated investment momentum. A newly released draft policy offers data center developers up to 20 years of tax exemptions and sharply streamlines land, power, and environmental approvals. Plans for dedicated economic zones for data centers are also underway. State governments are equally aggressive. Andhra Pradesh, where Google pledged its investment, will provide a 25% land cost discount and incentives worth approximately $2.65 billion. Karnataka and Telangana are similarly competing with reduced power tariffs and deregulation to attract data center projects.