Microsoft will invest $3.7 billion in Telangana to build data centres that will provide 660 megawatts of information technology (IT) capacity – enough to power about half a million European households annually.

Amazon has announced plans to invest $12.7 billion in Cloud infrastructure in India by 2030.

Tech investments and government initiatives in India

India has rolled out incentives for tech companies to establish operations ranging from electronics manufacturing to data storage. Leveraging its rapidly growing technology market and a vast pool of skilled workers, India aims to emerge as a key consumer and exporter of AI.

Last year, the Ministry of Electronics and Information Technology (MeitY) released its first “Expert Group Report” to create a vision for its IndiaAI initiative, which was launched in April 2024.

Key aspects of this initiative include strengthening computing infrastructure, improving data management through the National Data Management Office (NDMO), and fostering research, innovation, and targeted skilling.

By leveraging public-private partnerships and focusing on socially impactful AI projects, the initiative seeks to solidify India’s position as a global AI powerhouse and maximise the country’s demographic dividend.

This year alone, Microsoft, Amazon, and Google have committed to investing a combined $85 billion in data center infrastructure in various countries, including India.

This is especially important as major tech companies expect AI to be a major player. Lenovo India is confident that 20 per cent of the personal computer consumer market will be powered by AI by the end of FY25. The company added that demand for AI-enabled devices has been “much higher than anticipated,” as earlier 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 when it came to tech.

Expanding cloud computing capacity

According to Structure Research, as reported by FT, the investments by tech giants Microsoft and Amazon is likely to propel India to the top spot for self-built data center capacity in the Asia-Pacific region, up from sixth place. If Microsoft proceeds with its plans for the new 660 MW 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 data center expansions.

Data centres and sovereign AI

Microsoft’s data centres are also crucial for India AI plans, as it would allow the country to build its sovereign AI that is crucial to ensuring data security.

The concept of “sovereign AI” has significantly increased the demand for local data centres, as governments strive to ensure that sensitive information is stored and processed within their own borders. This focus extends to developing AI systems for national defence and security, necessitating 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 build sovereign AI, including GenAI capabilities.

This push from countries with rapidly growing economies has created a substantial addressable market for cloud providers like Microsoft and Amazon, FT said.

Local impact and challenges for AI expansion in India

India’s digital economy has rapidly expanded due to widespread smartphone use and affordable data. The government has attracted tech companies with substantial incentives, especially in states like Telangana. Microsoft’s research and development operations in India are the largest outside the US, 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 managed in India.

However, the environmental impact of data centers, which consume large amounts of electricity and water, poses a challenge. India’s power generation is still largely coal-dependent, despite significant investments in renewable energy, according to FT. Microsoft, committed to becoming carbon-negative by 2030, has signed agreements to source clean power in India from renewable energy companies.

 

First Published: Jun 18 2024 | 12:28 PM IST