India is poised to become a major player in the global market artificial intelligence (AI), as it benefits from investments from technology giants Microsoft and Amazon. These companies are investing billions in IT infrastructure in India, which aligns with the country’s aspirations to become a major AI hub, according to a report by the Financial Times (FT).
Microsoft will invest $3.7 billion in Telangana to build data centers that will provide 660 megawatts of computing capacity, enough to power about half a million European homes a year.
Amazon has announced plans to invest $12.7 billion in cloud infrastructure in India by 2030.
Technology investments and government initiatives in India
India has introduced incentives to attract technology companies to establish businesses ranging from electronics manufacturing to data storage. Leveraging its rapidly growing technology market and large pool of skilled workers, India aims to become a key consumer and exporter of AI.
Last year, the Ministry of Electronics and Information Technology (MeitY) released its first ‘expert panel report’ to create a vision for its IndiaAI initiative, launched in April 2024.
Key aspects of this initiative include strengthening IT infrastructure, improving data management through the National Data Management Office (NDMO) and promoting research, innovation and skills targeted.
By leveraging public-private partnerships and focusing on socially impactful AI projects, the initiative aims to consolidate India’s position as a global AI powerhouse and maximize the demographic dividend of country.
This year alone, Microsoft, Amazon and Google have committed to jointly invest $85 billion in data center infrastructure in various countries, including India.
This is particularly important as major tech companies expect AI to be a major player. Lenovo India is confident that 20% of the consumer PC market will be powered by AI by the end of FY25. The company added that the demand for AI-enabled devices is “much more higher than expected,” as reported by Business Standard.
Puneet Chandok, Microsoft’s president for India and South Asia, also told the FT that India was “one of the most exciting markets” to work in for technology.
Expanding Cloud Computing Capacity
According to Structure Research, as reported by FT, investments from tech giants Microsoft and Amazon are expected to propel India to first place for self-built data center capacity in the Asia-Pacific region, up from sixth place. If Microsoft continues with plans for 660 MW of new capacity, India could become its largest market for self-built data centers outside the United States.
Other countries, including Germany and the United States, are also expected to see significant expansion of their data centers.
Datacenters and sovereign AI
Microsoft’s data centers are also crucial to India’s AI plans, as they would enable the country to build its sovereign AI, essential for ensuring data security.
The concept of “Sovereign AI” has significantly increased demand for local data centers, as governments strive to ensure that sensitive information is stored and processed within their own borders. This goal extends to the development of AI systems for national defense and security, requiring local infrastructure. Sovereign technology, which a country fully owns, including intellectual property, encompasses sovereign AI and sovereign generative AI (GenAI) capabilities. Companies such as IBM and Nvidia have publicly supported the need for countries to develop sovereign AI, including GenAI capabilities.
This push from countries with rapid economic growth has created a substantial addressable market for cloud providers like Microsoft and Amazon, FT said.
Local impact and challenges of AI expansion in India
India’s digital economy has grown rapidly thanks to the widespread use of smartphones and affordable data. The government has lured tech companies with substantial incentives, especially in states like Telangana. Microsoft’s research and development operations in India are the largest outside the United States, with two-thirds of its 23,000 employees in the country being engineers. One in four AI projects on GitHub, Microsoft’s coding platform, is run in India.
However, the environmental impact of data centers, which consume large amounts of electricity and water, poses a challenge. India’s electricity generation is still largely dependent on coal, despite significant investments in renewable energy, according to the FT. Microsoft, committed to becoming carbon neutral by 2030, has signed deals to source clean energy in India from renewable energy companies.
First publication: June 18, 2024 | 12:28 p.m. STI
