Microsoft CEO Satya Nadella on Tuesday announced plans to invest $17.5 billion in India to build infrastructure and sovereign capabilities for the country’s AI-first future.

The commitment marks the company’s largest investment in Asia and the third major AI-driven investment announced in India in the past two months.

Microsoft said the $17.5 billion investment, equivalent to around Rs 1.58 lakh crore, builds on the $3 billion funding announced earlier this year which is on track to be spent by the end of calendar year 2026.

The new funding will be deployed between 2026 and 2029 to drive AI diffusion at a population scale.

"To support the country’s ambitions, Microsoft is committing USD 17.5B—our largest investment ever in Asia—to help build the infrastructure, skills, and sovereign capabilities needed for India’s AI-first future," Nadella said on X after meeting Prime Minister Narendra Modi.

The meeting took place ahead of the Microsoft India AI tour and focused on India’s AI roadmap and growth priorities.

The latest commitment follows two significant AI-related investments announced recently.

On 14 October, Google unveiled plans to invest $15 billion over the next five years to set up an AI hub in India that will include the country’s largest data centre in partnership with the Adani Group.

Digital Connexion, a joint venture between Brookfield, Reliance Industries and US-based Digital Realty, subsequently announced an $11 billion investment plan.

Amazon had earlier announced plans in May 2023 to invest $12.7 billion in India by 2030 to expand its local cloud and AI infrastructure across Telangana and Maharashtra. The company has already invested $3.7 billion between 2016 and 2022.

Microsoft said its India South Central cloud region based in Hyderabad is scheduled to go live in mid-2026.

"This will be our largest hyperscale region in India, comprising three availability zones — roughly equivalent in size to two Eden Gardens stadiums combined," the statement said.

The company has doubled its target for developing AI skilled talent in India to 20 million by 2030 from the earlier plan of 10 million.

"India’s AI journey depends on empowering skilled talent. For this, we are doubling our commitment of January 2025 to equip 20 million Indians with essential AI skills by 2030, working with government, industry, and digital public platforms to ensure equitable access to opportunity. Through our ADVANTA(I)GE India initiative, executed by Microsoft Elevate, we have already trained 5.6 million people since January 2025 —well ahead of the original goal of training 10 million by 2030," the statement said.

Union Electronics and IT minister Ashwini Vaishnaw said India remains committed to innovation anchored in trust and sovereignty as AI reshapes the digital economy.

"Microsoft’s landmark investment signals India’s rise as a reliable technology partner for the world. This partnership will set new benchmarks and drive the country’s leap from digital public infrastructure to AI public infrastructure," Vaishnaw said.

Microsoft India and South Asia, President, Puneet Chandok said that the company's investment will be used to continue to scale its cloud and AI infrastructure, skilling initiatives and ongoing operations across India.

"This includes our workforce of more than 22,000 employees across Bengaluru, Hyderabad, Pune, Gurugram, Noida and other cities — representing the diversity of Microsoft’s businesses," Chandok said.

With India preparing to implement the Digital Personal Data Protection regime, Microsoft is introducing sovereign public cloud and sovereign private cloud for Indian customers.

“With sovereign public cloud now available in India, organisations can leverage a prescriptive architecture for deploying workloads in Azure with built-in compliance guardrails using Sovereign Landing Zones, do policy enforcement, and apply governance controls,” the statement said.

Microsoft also said Microsoft 365 Copilot will offer in-country data processing in India by the end of 2025. The move along with sovereign cloud offerings is expected to increase competitive pressure in the AI space and could attract further investment ahead of the Digital Personal Data Protection Rules 2025 coming into effect.

The company had recently announced that Microsoft 365 Copilot will offer in-country data processing in India by the end of 2025.

The move by Microsoft to put sovereign cloud and in-country data processing is likely to put pressure on competitors in AI space which may lead to more investment flowing into the country ahead of the Digital Personal Data Protection Rules 2025 coming into effect.

The company also announced integration of advanced AI capabilities into two key digital public platforms of the Ministry of Labour and Employment — e-Shram and the National Career Service (NCS).

“The initiative aims to extend the benefits of AI to more than 310 million informal workers,” the statement said.