Microsoft plans to invest $17.5 billion in India over the next four years, expanding its AI and cloud footprint in the South Asian nation, whose vast online and smartphone user base is turning it into a critical battleground for global tech companies.
Announced on Tuesday, the investment — Microsoft’s largest in Asia — will fund new data centers, AI infrastructure, and skilling programs from 2026 to 2029, building on the $3 billion the company committed in India in January.
Microsoft’s move comes as major U.S. tech companies ramp up spending on data centers and AI compute worldwide, with India emerging as a strategic prize thanks to its fast-growing developer base and one of the world’s largest pools of internet and smartphone users.
The latest push also puts pressure on rivals such as Google, Amazon, and OpenAI, which are growing their presence in India to tap demand for cloud services and AI tools from businesses, startups, and government agencies. Moreover, the investment aligns with New Delhi’s push to accelerate digital infrastructure and AI adoption across sectors, as India looks to position itself as a global technology hub while addressing concerns around data governance and equitable access.
The announcement comes during Microsoft CEO Satya Nadella’s visit to India and follows his meeting with Prime Minister Narendra Modi on Tuesday, ahead of a keynote in New Delhi on Wednesday. The Redmond-based company also said it will open a new data center region in Hyderabad by mid-2026, its largest in India, comprising three availability zones — a footprint the company described as roughly the size of two Eden Gardens stadiums. Microsoft said it will continue expanding its three existing data-center regions in Chennai, Hyderabad, and Pune.
As part of the push, Microsoft also announced it will work with the Ministry of Labour and Employment to integrate advanced AI capabilities into two of its flagship digital public platforms — e-Shram and the National Career Service — to offer AI-driven services to more than 310 million informal workers.
The two Indian government platforms will use Microsoft’s Azure OpenAI Service to provide multilingual access, AI-assisted job matching, predictive analytics on skill and demand trends, automated résumé creation, and personalized pathways, the company said.
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Microsoft also said it is rolling out new sovereign cloud options for Indian customers, including a Sovereign Public Cloud now available across its India regions and a Sovereign Private Cloud powered by Azure Local for both connected and air-gapped operations. The offerings would help enterprises meet regulatory and data-residency requirements and support high-performance workloads with access to the latest Nvidia GPUs and Microsoft 365 services, the company noted.
Additionally, Microsoft said its skilling efforts are also accelerating, noting that through its “ADVANTA(I)GE India” initiative, it has trained 5.6 million people since January — well ahead of its goal of training 10 million by 2030 — with the programs enabling more than 125,000 individuals to secure jobs or start businesses. The company is doubling its earlier commitment and now aims to equip 20 million Indians with basic AI skills by 2030, working with government agencies, industry partners, and digital public platforms to broaden access to training.
India attracts global tech firms in the AI era
Microsoft’s investment commitment comes just months after Google announced a $15 billion plan to build an AI hub and data-center infrastructure in India — the company’s largest investment in the country and one that follows its earlier $10 billion pledge in 2020.
In the recent months, India has emerged as an especially attractive market for global tech companies as they look for regions to expand their AI footprint, drawn by the country’s vast base of internet subscribers, hundreds of millions of smartphone users, a fast-growing startup ecosystem, and the Indian government’s aggressive digitization agenda — all of which promise both consumer scale and enterprise demand. The push has accelerated this year, with OpenAI and Anthropic setting up offices in India, and Google and Perplexity striking partnerships with major telecom operators Reliance Jio and Bharti Airtel, respectively, to deepen their reach in the market.
However, even as global tech firms ramp up investment, hyperscalers are expected to face significant constraints in India, where data-center expansion is challenged by patchy power availability, high energy costs, and water scarcity in several regions — factors that could slow the build-out of AI infrastructure and raise operating expenses for cloud providers.
Nonetheless, the Indian government has been pushing aggressively to draw more big-tech investment, framing large-scale data-center and AI projects as central to its economic and digital-public-infrastructure ambitions. Despite the constraints, New Delhi has rolled out incentives for AI and semiconductor projects, eased some regulatory hurdles, and encouraged partnerships with domestic telecom and IT firms to anchor more of the global AI value chain in India.
When it comes to AI, the world is optimistic about India!
Had a very productive discussion with Mr. Satya Nadella. Happy to see India being the place where Microsoft will make its largest-ever investment in Asia.
The youth of India will harness this opportunity to innovate… https://t.co/fMFcGQ8ctK
— Narendra Modi (@narendramodi) December 9, 2025
“Microsoft has been part of India’s fabric for more than three decades,” said Puneet Chandok, president, Microsoft India and South Asia, in a prepared statement. “As the nation moves confidently into its AI-first future, we are proud to stand as a trusted partner in advancing the infrastructure, innovation, and opportunity that can power a billion dreams.”
Microsoft already employs more than 22,000 people across Bengaluru, Hyderabad, Pune, Gurugram, Noida, and other cities, including engineering teams that build AI products such as Copilot Studio, Azure AI Search, AI agents, speech and translation tools, and Azure Machine Learning for global markets, while also supporting the company’s domestic operations.
