AI Investments by Amazon and Microsoft in India

Tech giants Amazon and Microsoft have announced a significant combined investment plan of $52.5 billion for India, which they believe will enhance the nation’s position as a hub for artificial intelligence (AI) and cloud infrastructure.

On Wednesday, Amazon revealed its intention to invest $35 billion into India by the year 2030, focusing on advancing AI-driven digitization, export growth, and job creation. This announcement closely follows Microsoft’s commitment of $17.5 billion aimed at bolstering the country’s AI ecosystem.

India has recently seen a remarkable rise in global tech investment, capturing attention for its potential in AI and cloud capabilities. Notably, in October, Google pledged a $15 billion investment to develop an AI data hub, while Intel also unveiled a partnership with Tata Electronics to support the latter’s substantial $14 billion semiconductor manufacturing initiative.

Indian Prime Minister Narendra Modi expressed optimism regarding India’s AI prospects, emphasizing the positive view of India’s AI capabilities after a meeting with Microsoft CEO Satya Nadella earlier this week.

Amazon’s latest investment underscores its commitment to India, building on its previous $40 billion investment in the country, positioning it as the “largest foreign investor” in India. A significant portion of Amazon’s $35 billion plan will concentrate on enhancing local cloud and AI infrastructure.

Microsoft’s recent announcement builds on its earlier $3 billion investment made in 2023, which includes the establishment of a new hyperscale cloud region, a cluster of data centers, in Hyderabad slated to become operational in mid-2026. These data centers will play a crucial role in supporting India’s AI ambitions, despite valid concerns about local water shortages.

The company also noted that India will have access to its sovereign public cloud, designed to assist organizations in managing data while maintaining sensitive information within the nation’s borders. This investment is part of Microsoft’s larger $23 billion AI expansion plan across multiple countries, including Canada, Portugal, and the UAE, aimed at enhancing its competitive posture against rivals like Amazon and Google.

Moreover, Microsoft plans to integrate AI into Indian government platforms, potentially benefiting around 310 million informal workers in the country, thus demonstrating the broader societal impact of such initiatives.

These investments come at a time when India is ramping up efforts in semiconductor manufacturing, guided by state-supported initiatives aiming to establish a robust domestic chip-making industry. While the country, hosting over a billion internet users and a vast tech talent pool, is a significant player in the AI landscape, it continues to lag behind global forerunners such as China and the US in terms of technological advancement.

Nonetheless, India is attracting substantial investments in crucial computing technologies like chips, facilitated by government initiatives that offer generous subsidies to companies establishing chip production facilities. Furthermore, a model of India’s sovereign AI framework is expected to be revealed in February next year, indicating ongoing advancements in the sector.