On January 16, 2024, slogans related to artificial intelligence (AI) were displayed on the Intel Pavilion screen during the 54th World Economic Forum Annual Meeting in Davos, Switzerland.
Dennis Bariboos | Reuters
Big tech is doubling down on billions of dollars of investment in India, attracted by the rich resources for building data centres, large talent and digital user pools, and market opportunities.
Within 24 hours, Microsoft and Amazon committed more than $50 billion to India’s cloud and AI infrastructure, and Intel on Monday announced plans to manufacture chips in India to take advantage of rising demand for PCs and rapid adoption of AI.
Although India lags behind the US and China in the race to develop native AI foundation models and lacks large-scale AI infrastructure companies in the country, it hopes to leverage its expertise in the information technology sector to create and deploy AI applications at the enterprise level, providing significant opportunities for Big Tech companies as well.
S. Krishnan, secretary of India’s Ministry of Electronics and Information Technology, told CNBC that for companies to effectively use AI, it’s not enough just to have the models and the compute; they need companies to create the application layer and a large talent pool to deploy it.
Stanford University ranks India among the top four countries along with the US, China, and the UK in its global and national AI Vibrancy Rankings. GitHub, a community of developers, ranked India at the top with a global share of 24% of all projects.
Krishnan said India’s opportunity lies in “developing applications” that will be used to drive revenue for AI companies.
On Tuesday, Microsoft announced a $17.5 billion investment in the country over four years to expand hyperscale infrastructure, incorporate AI into the nation’s platforms, and improve workforce readiness.
Tarun Pathak, research director at Counterpoint Research, said, “This scale of capital investment gives Microsoft a first-mover advantage in GPU-rich data centers, makes Azure the preferred platform for AI workloads in India, and deepens alignment with the government’s AI public infrastructure push.”
Amazon on Wednesday announced plans to invest more than $35 billion in the country, on top of the $40 billion it already has invested.
Over the past few months, AI and technology giants such as OpenAI, Google, and Perplexity have made their tools available to millions of people in India for free, with Google also solidifying plans to invest $15 billion in building data center capacity for a new AI hub in southern India.
“India combines a huge digital user base, rapidly growing cloud and AI demand, and an excellent IT ecosystem to build and leverage AI at scale, making India a core engineering and deployment hub, not just a user market,” said Pathak.
data center opportunities
India has several advantages when it comes to building data centers. Asia-Pacific markets such as Japan, Australia, China, and Singapore are mature. Singapore, one of the oldest data center hubs in the region, has limited scope to deploy large data centers due to land availability issues.
India has abundant space for large-scale data center development. Compared to data center hubs in Europe, electricity costs in India are relatively low. Coupled with India’s growing renewable energy capacity (vital for power-hungry data centers), the economics are starting to look compelling.
The rise of e-commerce, a key driver of data center growth in recent years, and local demand driven by the possibility of new rules on storing social media data, strengthen this argument.
Simply put, India is entering a sweet spot where global cloud providers, AI players, and domestic digitization are all converging to form one of the hottest data center markets in the world.
“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 for big data and AI at International Data Corporation.
“The lack of adequate computing infrastructure to run AI models is a major gap, and therefore a significant opportunity,” she added. Big Tech companies are looking to tap into India’s infrastructure opportunities by investing heavily in the cloud and data center space.
As global companies build data centers in India for the world, they are expanding capacity from traditional centers such as Mumbai and Chennai near landing cables to closer to service hubs in IT cities such as Bangalore, Hyderabad and Pune, Krishnan said.
—CNBC’s Dylan Butts and Amitoy Singh contributed to this report.
