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India is poised to become a formidable force in artificial intelligence (AI), with investments from leading industry players such as Microsoft and Amazon. These companies are investing billions in computing infrastructure in India as the country seeks to position itself as a dominant force in AI, the FT says. Microsoft will invest US$3.7 billion to construct data centers in Telangana. These centers will offer 660 MW of IT potential and be able to power nearly half a million European households every year.
For instance, Amazon, a leading online retail firm, has disclosed its intention to spend US$12—cloud infrastructure spending to reach 7 billion in India by 2030.
India has put in place incentives for technology firms to set up operations, including electronics manufacturing and data storage. With a growing technology market and a large workforce of qualified employees, AI in India wants to become a consumer and producer.
Earlier this year, MeitY released its first' Expert Group Report' to build the framework for the AI in India project initiated in April 2024.
Some of these interventions are computing infrastructure enhancement, data management under the NDMO, research and innovation, and skills development in specific fields.
By utilizing the PPP model and placing emphasis on the socially relevant use of AI, the initiative aims to establish India as a leading AI nation and fully unlock the country's demographic dividend.
As a social cause, backed by the PPP model and targeting socially relevant AI projects, the plan is to establish India as one of the global leaders in AI and unleash the true potential of demographics.
Year to date, Microsoft, Amazon, and Google have planned to pump a cumulative $85 billion in data center capital across different geographies, including India.
This is especially important as significant tech companies anticipate AI will compete vastly. The Lenovo India PCSD division is optimistic that 20% of the consumer personal computer market will be AI-enabled by FY25. The company also stated that the market for AI products has been tremendously “higher than expected,” as Business Standard revealed previously.
Microsoft India Operations President Puneet Chandok reportedly said in an interview with the Financial Times that India is “one of the most interesting places to operate in within technology.”
Structure Research, as quoted in FT, also predicts that from the sixth position, investments of tech giants such as Microsoft and Amazon will make India the leader in self-built data capacity in the Asia-Pacific region. Further, if Microsoft goes ahead with the new capacity of 660 MW, then India could become the single largest market where it invests in self-built data centers, excluding the USA.
It is also anticipated that expansion for data centers will remain robust across other countries such as Germany and the United States.
Microsoft data centers are also crucial for India's AI plans. They would enable the country to build its own sovereign AI, which is necessary in today’s technology era.
The idea of ‘sovereign AI’ has further boosted the prospects of local data centers as governments seek to host and process data within their territories. This also applies to the creation of AI systems for national defense and security, thus requiring local support.
This has made a distinction between sovereign AI and sovereign generative AI (GenAI), where sovereign AI is a technology that is fully owned by a country, including intellectual property. IBM Nvidia and other global players have stated that countries need to develop sovereign AI, including GenAI.
According to the FT, this pressure from countries with emerging economies has generated a massive market for cloud service suppliers such as Microsoft and Amazon.
The Internet economy has grown very fast in India mainly because of increased smartphone usage and affordable data. Tech giants have been wooed with significant incentives, particularly in states such as Telangana. Microsoft’s research and development centers in India are second only to those in the US, where two-thirds of its 23,000 employees in the country are engineers.
According to data from GitHub, Microsoft’s coding platform, a quarter of all AI projects are now managed in India.
However, the issue that crops up is environmental considerations, especially considering that data centers are heavy consumers of both electricity and water.
Even though India's utilities artificial intelligence have invested large sums of money in renewable power sources, FT claimed that India relies heavily on coal for power generation. To cut its emissions and reach its goal of being carbon-negative by 2030, Microsoft has entered power purchase agreements with renewable power producers in India.
Intentional investment in AI by the Indian Government supported by giants such as Microsoft and Amazon represent a powerful change to India to become the home of AI. As many technological advancements are receiving massive support from the central and state governments, along with private players, India has the potential to become a frontrunner in harnessing AI potential and turning it into a powerful driver for change in the economic and social contexts.
Microsoft and Amazon are investing in India's AI infrastructure to leverage the country's growing tech market and vast pool of skilled workers and support its aspirations to become a global AI hub.
Microsoft is investing $3.7 billion in Telangana to build data centers with 660 megawatts of IT capacity.
Amazon plans to invest $12.7 billion in cloud infrastructure in India by 2030.
These investments will strengthen India's computing infrastructure, improve data management, foster research and innovation, and support the growth of AI-enabled technologies.
The IndiaAI initiative, launched in April 2024, aims to solidify India’s position as a global AI powerhouse by leveraging public-private partnerships, focusing on socially impactful AI projects, and maximizing the country's demographic dividend.
Microsoft's data centers will enable India to build sovereign AI, ensuring data security and supporting the development of AI systems for national defense and security.
Sovereign AI refers to AI systems that are fully owned and controlled by a country. These systems ensure that sensitive data is stored and processed within national borders, which is crucial for data security and national defense.
One major challenge is the environmental impact of data centers, which consume large amounts of electricity and water. Despite investments in renewable energy, India’s power generation is still largely coal dependent.
Microsoft, for example, has committed to becoming carbon-negative by 2030 and has signed agreements to source clean power in India from renewable energy companies.
The investments by Microsoft and Amazon are expected to propel India to the top spot for self-built data center capacity in the Asia-Pacific region, enhancing its global standing in AI and technology.
