Wednesday July 17, 2024

India pulls in tech giants for its AI ambitions

Authorities in India have offered incentives for tech companies to set up everything from electronics manufacturing to data storage

By News Desk
June 25, 2024
Microsoft office in Telangana India seen in this image. — Microsoft/file
Microsoft office in Telangana India seen in this image. — Microsoft/file 

NEW DELHI: India is pushing ambitions to become a leading artificial intelligence hub as Big Tech groups such as Microsoft and Amazon prepare to spend billions on computing infrastructure in the country in a race to dominate the burgeoning industry.

Authorities in India have offered incentives for tech companies to set up everything from electronics manufacturing to data storage. They hope a fast-growing domestic technology market and vast pool of skilled workers will transform the country into a main consumer and exporter of AI.

Microsoft has committed about $3.7bn to India’s southern state of Telangana, local officials have said. According to Structure Research, the tech giant has acquired land in India for the construction of data centres that would add 660 megawatts of IT capacity — equivalent to the annual electricity needs of about half a million European households. Amazon, meanwhile, plans to invest about $12.7bn in cloud infrastructure in India by 2030.

“India today is one of the most exciting markets in the world for tech,” Puneet Chandok, Microsoft’s president for India and South Asia, said. “The intent is to constantly build capacity in this part of the world to serve customers who are both innovating for India and for the world.”

Big Tech companies are set on boosting their cloud computing capacities as they vie to dominate generative AI. Microsoft, Amazon and Google this year announced plans to invest at least a combined $85bn in infrastructure, such as data centres, in countries including Singapore, the US, Saudi Arabia and Japan.

The companies’ rush to build their own data centres in India is expected to propel that country to the top spot by self-built capacity in the Asia Pacific region, from sixth place. The estimate excludes data centre capacity built in the region by third parties that lease the facilities to Big Tech groups and other companies.

If Microsoft goes ahead with building the 660MW of new capacity in India, the country would become the company’s largest market for its self-built data centres outside the US. Microsoft declined to comment on the financial or capacity figures.

Other countries expected to be hotspots of near-term data centre expansion are Germany and the US, which includes northern Virginia, the largest global data centre market, according to industry research groups Structure, TeleGeography and Dgtl Infra.

The concept of “sovereign AI” has helped fuel demand among national governments for data centres in their countries, said analysts. Authorities are keen to ensure that sensitive information be stored and processed within their borders and to develop their own AI systems and tools.

Governments were “looking to build AI applications that will focus on defence, military, national security” and as such “needs to be housed in country”, said Jabez Tan, head of research at Structure.

The push from countries with fast-growing economies has created “a lot of addressable market” for cloud providers such as Microsoft and Amazon, Tan said. Indian authorities are courting tech companies with billions of dollars in incentives, including in Telangana, and the country’s digital economy has grown rapidly thanks to the spread of smartphones and cheap data.

India is already home to Microsoft’s largest research and development operations outside the US. About two-thirds of the tech giant’s 23,000 employees in the country are engineers, many located in Telangana’s capital, Hyderabad. One in four AI projects on GitHub, a Microsoft-owned developer platform, is run out of India, according to the company.

However, the surge in data centres, which require vast amounts of electricity and water to operate, threatens to take an environmental toll. The majority of power generation capacity in India — one of the world’s most water-stressed countries — still comes from coal despite rapid investment in renewable energy.

Chandok said Microsoft’s expansion plans would not affect its goal of becoming carbon negative by 2030. The company has signed agreements to procure clean power in India from renewable energy companies, including ReNew.