Microsoft invests $17.5 billion in India to drive AI diffusion at population scale

Microsoft said on Tuesday that it would invest $17.5 billion in India over the next four years, a sweeping commitment that underscores the nation’s growing role in the global race to build and deploy artificial intelligence. The spending — the company’s largest in Asia — will go toward expanding cloud and AI infrastructure, workforce training and ongoing operations between 2026 and 2029. It follows an earlier $3 billion pledge announced this year, which Microsoft expects to complete by the end of 2026.

The announcement came after Satya Nadella, Microsoft’s chairman and chief executive, met with Prime Minister Narendra Modi to discuss India’s ambitions to develop what the government has described as an AI-ready economy. The company said its strategy in India would focus on scale, skills and digital sovereignty, aligning with the government’s push to build a nationwide ecosystem to support AI development and adoption.

Executives cast the investment as part of a longer arc in which India could shift from building digital public infrastructure — such as payments and identity systems that reach nearly the entire population — to constructing public AI infrastructure accessible at national scale. “This partnership will set new benchmarks,” Ashwini Vaishnaw, India’s minister for electronics and information technology, said in a statement, calling Microsoft’s move a signal of India’s emergence as a “reliable technology partner for the world.”

Puneet Chandok, president of Microsoft India and South Asia, said the company’s deepening commitment was meant to support an “AI-first future” for the country, where Microsoft has operated for more than three decades. He said the new investment, together with the earlier $3 billion, would help India translate its AI goals into “impact for every citizen,” supported by hyperscale infrastructure, sovereign cloud offerings and expanded skilling programs.

The funds will bolster Microsoft’s 22,000-strong workforce in India — spanning Bengaluru, Hyderabad, Pune, Gurugram, Noida and other cities — which contributes to building the company’s global AI products and infrastructure while supporting customers across the country. Microsoft’s Indian teams work on services such as Copilot Studio, Azure AI Search, speech and translation tools, AI agents and Azure Machine Learning.

Thank you, PM @narendramodi ji, for an inspiring conversation on India’s AI opportunity. To support the country’s ambitions, Microsoft is committing US$17.5B—our largest investment ever in Asia—to help build the infrastructure, skills, and sovereign capabilities needed for… pic.twitter.com/NdFEpWzoyZ

— Satya Nadella (@satyanadella) December 9, 2025

Building India’s AI Backbone

A major portion of the investment will be directed to expanding cloud capacity. Central to that plan is the India South Central region, a new Hyderabad-based hyperscale cluster expected to go live in mid-2026. The facility, consisting of three availability zones, will be Microsoft’s largest in the country.

The company will also increase capacity in its existing data center regions in Chennai, Hyderabad and Pune, offering lower-latency and more resilient services to enterprises, start-ups and public institutions.

AI for Public Platforms

Microsoft also announced new AI integrations for two national labor platforms — e-Shram and the National Career Service — part of the Ministry of Labour and Employment. The tools, built on Azure and Azure OpenAI Service, aim to serve more than 310 million informal workers by offering multilingual support, AI-assisted job matching, predictive analytics and automated resumé creation. E-Shram, which links workers to 18 welfare schemes, has been credited with helping expand India’s social protection coverage from 24 percent in 2019 to 64 percent in 2025, according to ILO estimates.

A Workforce for the AI Era

India’s ability to compete in the AI economy will hinge on skilled labor. Microsoft said it would double its skilling commitment made earlier this year, aiming to train 20 million people in AI fundamentals by 2030. Through its ADVANTA(I)GE India initiative, the company said it had already trained 5.6 million people since January and enabled more than 125,000 job and entrepreneurial opportunities.

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

Pushing Digital Sovereignty

In a nod to rising regulatory demands, Microsoft introduced two new offerings for Indian customers: a Sovereign Public Cloud hosted within Microsoft’s India regions, and a Sovereign Private Cloud, powered by Azure Local, which can operate in both connected and disconnected environments. These options provide stricter controls for governance, compliance and data residency — an increasingly important concern for government agencies and regulated industries such as banking and healthcare.

The company also reiterated that Microsoft 365 Copilot would offer in-country processing of prompts and responses by the end of 2025, making India one of the first four markets globally to receive the feature.

Microsoft said the investments collectively reflect its long-term view of India as central to the global expansion of AI. By strengthening infrastructure, embedding AI into national platforms and expanding access to training, the company said, India is positioned to emerge as a leader in the next generation of digital technologies.