Microsoft AI investment in India expands infrastructure

India’s artificial intelligence trajectory is entering a decisive phase, marked by scale-driven adoption and institutional integration. Within this context, Microsoft AI investment in India has been expanded significantly, with the company announcing its largest-ever investment in Asia to support cloud infrastructure, AI capabilities, skilling initiatives and ongoing operations.

Microsoft plans to invest USD 17.5 billion over four years, from calendar year 2026 to 2029. This builds on a previously announced USD 3 billion commitment that is on track to be fully deployed by the end of 2026.

Alignment with national AI priorities

The announcement follows a meeting between Microsoft chairman and CEO Satya Nadella and Prime Minister Narendra Modi ahead of the India AI tour. Discussions focused on India’s AI roadmap and growth priorities.

Microsoft stated that its investment strategy in India is structured around three pillars: scale, skills and sovereignty. These priorities align with the government’s objective of developing a national AI ecosystem that enables innovation, access and resilience across sectors.

According to the company, the collaboration aims to support India’s transition from digital public infrastructure to AI-enabled public infrastructure over the coming decade.

Government perspective on AI and sovereignty

Ashwini Vaishnaw, Union Minister of Electronics and Information Technology, said the investment reflects India’s commitment to innovation anchored in trust and sovereignty. He said the initiative signals India’s growing role as a reliable global technology partner and supports the country’s shift towards AI public infrastructure.

Dr. Mansukh Mandaviya, Minister of Labour and Employment and Youth Affairs and Sports, highlighted the role of AI in strengthening social protection systems. He said the integration of AI into platforms such as eShram and the National Career Service supports India’s goal of extending social security coverage to a larger population while improving employment outcomes.

Expanding cloud and AI operations

Microsoft said the new investment will be used to scale cloud and AI infrastructure, skilling programmes and operations across India. The company employs more than 22,000 people across cities, including Bengaluru, Hyderabad, Pune, Gurugram and Noida.

These teams work across the product lifecycle, covering model development, engineering, product innovation, hyperscale data centre operations and customer support. Their work spans Microsoft’s AI stack, including infrastructure, application platforms and enterprise products.

Strengthening India’s AI infrastructure backbone

A core element of the Microsoft AI investment in India is the development of secure, sovereign-ready hyperscale infrastructure. The India South Central cloud region in Hyderabad, scheduled to go live in mid-2026, will become the company’s largest hyperscale region in the country. It will include three availability zones.

Microsoft will also continue expanding its existing data centre regions in Chennai, Hyderabad and Pune. The expansion is expected to provide improved resilience, low-latency performance and increased capacity for enterprises, startups and public sector organisations.

AI diffusion at the population scale

Microsoft announced the integration of advanced AI capabilities into two key platforms under the Ministry of Labour and Employment: eShram and the National Career Service. The initiative aims to benefit more than 310 million informal workers.

Built on Azure cloud infrastructure, these platforms now support features such as multilingual access, AI-assisted job matching, predictive analytics for skills demand, automated résumé creation and personalised employment pathways. The deployment represents a step towards applying AI at population scale within India’s digital publicinfrastructure.

Building an AI-ready workforce

Workforce development is another major focus area of the investment. Microsoft has doubled its skilling commitment, aiming to equip 20 million people in India with AI-related skills by 2030.

Through the ADVANTA(I)GE India initiative, implemented by Microsoft Elevate, the company has trained 5.6 million individuals since January 2025. According to Microsoft, these programmes have contributed to employment and entrepreneurial opportunities for more than 125,000 participants.

Digital sovereignty solutions

As part of its India strategy, Microsoft introduced Sovereign Public Cloud and Sovereign Private Cloud offerings for Indian customers. These solutions are designed to support compliance, governance and data residency requirements.

The Sovereign Public Cloud is now available from Microsoft’s Indian regions, while the Sovereign Private Cloud, powered by Azure Local, supports connected and disconnected operations. Microsoft also announced that Microsoft 365 Copilot will offer in-country data processing in India by the end of 2025, strengthening compliance for regulated sectors such as government, BFSI and healthcare.

Long-term outlook

Microsoft said the investment reflects its continued commitment to India’s AI ecosystem. By expanding hyperscale infrastructure, embedding AI into national platforms and strengthening workforce readiness, the company aims to support India’s ambition to play a leading role in the global AI landscape, driven by scale, skills and digital sovereignty.