Artificial intelligence

Microsoft And Amazon To Collaborate On $16.4 Billion AI Investment In India

Microsoft and Amazon plan to invest $16.4 billion by 2030 in cloud computing and artificial intelligence in India.

TakeAway Points:

  • Amazon and Microsoft intend to invest $12.7 billion and $3.7 billion, respectively, in India’s AI infrastructure.
  • India wants to use its highly qualified workforce and rapidly expanding tech sector to become a premier location for AI.
  • Data centres need a lot of energy, which raises environmental issues. Microsoft promises to achieve carbon-negative targets by 2030, even though India still uses coal.

Tech Giants Investment in India

India is positioning itself as a major hub for artificial intelligence (AI) as major technology companies like Microsoft and Amazon plan significant investments in the country’s computing infrastructure. Authorities in India have been offering incentives to tech companies to establish operations ranging from electronics manufacturing to data storage. The goal is to leverage the fast-growing domestic technology market and a vast pool of skilled workers to transform India into a leading consumer and exporter of AI.

Microsoft has committed approximately $3.7 billion to the southern state of Telangana, according to local officials. Structure Research reports that the tech giant has acquired land in India to build data centers that would add 660 megawatts of IT capacity, equivalent to the annual electricity needs of about half a million European households. Amazon, on the other hand, plans to invest around $12.7 billion in cloud infrastructure in India by 2030.

“India today is one of the most exciting markets in the world for tech,” said Puneet Chandok, Microsoft’s president for India and South Asia. 

“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.”

Growth in the Construction of Data Centres

Big Tech companies are ramping up their cloud computing capacities to dominate the generative AI space. Microsoft, Amazon, and Google have announced plans to invest at least a combined $85 billion in infrastructure, including data centers, in countries such as Singapore, the US, Saudi Arabia, and Japan. The rush to build data centers in India is expected to propel the country to the top spot in the Asia Pacific region for self-built capacity, moving up from sixth place, according to Structure Research.

If Microsoft proceeds with its plan to build 660MW of new capacity in India, the country would become the company’s largest market for self-built data centers outside the US. Other countries expected to see significant data center expansion include Germany and the US, particularly northern Virginia, the largest global data center market.

The concept of “sovereign AI” has driven demand among national governments for data centers within their borders. Governments are keen to ensure that sensitive information is stored and processed domestically and to develop their own AI systems and tools. 

“Governments are looking to build AI applications that will focus on defense, military, and national security,” said Jabez Tan, head of research at Structure. “These need to be housed in-country.”

Environmental Issues

The rapid expansion of data centers, which require vast amounts of electricity and water to operate, poses environmental challenges. India, one of the world’s most water-stressed countries, still relies heavily on coal for power generation despite significant investments in renewable energy. Microsoft has stated that its expansion plans will 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.

However, the environmental toll remains a concern. Data centers consume large amounts of resources, and the majority of India’s power generation capacity still comes from coal. This raises questions about the sustainability of such rapid expansion in a country already facing significant environmental challenges.

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