Microsoft to Invest $3B in India Digital Infrastructure in Biggest Asia Commitment Yet

Microsoft chairman and CEO Satya Nadella announced on Tuesday that his firm plans to invest $3 billion to develop data centres and other digital infrastructure in his home country, marking the tech giant’s biggest single market commitment in Asia to date.

With the company racing to seize a position as a global leader in AI, Nadella said Microsoft will invest the funds over the next two years to develop new data centres and expand existing facilities. As part of the same plan, the graduate of Mangalore University in Karnataka state said the company aims to train 10 million people over the next five years to help accelerate AI innovation in India.

The Microsoft pledge marks the latest billion dollar commitment to Asia’s digital ecosystem by a major US cloud provider, including Microsoft’s announcement of $2.9 billion in Japan investment in April last year, and major initiatives by Amazon and Google in the region over the past year.

“India is rapidly becoming a leader in AI innovation, unlocking new opportunities across the country. The investments in infrastructure and skills we are announcing today reaffirm our commitment to making India AI-first, and will help ensure people and organizations across the country benefit broadly,” Nadella said.

$80 Billion in Data Centres

The company has not yet disclosed specifics of its India infrastructure plan, but said it aims to develop a “scalable AI computing ecosystem” in the country to meet rapidly growing demands.

Microsoft has invested more than $13 billion in artificial intelligence startup OpenAI and the company’s vice chair and president Brad Smith said less than one week ago that Microsoft would invest $80 billion this fiscal year to develop AI-capable data centres.

Microsoft currently operates India data centre regions in Pune, Chennai, and Mumbai. In September 2024, the company acquired 16 acres of land for $62 million to expand its presence in Pune. It is also developing a fourth data centre region in Hyderabad which is slated to go live by 2026.

Microsoft made its latest commitment as analysts predict a surge in India data centre investment, with JLL saying in November that it expects capacity in the country to increase 66 percent by 2026, driven by a surge in AI demand and India’s rollout of 5G.

This is a significant market for them (Microsoft). India has a large customer base, and Microsoft has a notable presence in terms of end-use clients, employees, and operations. This is a major factor in deciding to invest strongly in India,” Srihari Srinivasan, director and data centre services lead for Savills India told Mingtiandi.

Nadella’s competitors in the cloud universe have also been ramping up their India commitments, with Amazon Web Services saying in May 2023 that it plans to invest $12.7 billion in developing cloud infrastructure in the country by 2030.

Building an Asian Cloud

The surge in India data centre commitments by US cloud players is part of a broader wave of data centre investment to support AI applications and cloud services in Asia over the past year.

In January 2024, Amazon Web Services said it plans to invest $15 billion in expanding its cloud computing infrastructure in Japan by 2027. Then in September, Google announced a $1 billion investment plan in Thailand, including a new data centre and a public cloud location.

In addition to its India and Japan commitments, Microsoft’s Nadella in May announced plans to invest $2.2 billion in cloud and AI infrastructure in Malaysia over the next four years. That pledge came just days after the corporate chieftain unveiled a $1.7 billion investment plan for data centres and other infrastructure in Indonesia.Microsoft has also pledged to invest in Thailand, although the exact amount remains unconfirmed.