Recently, India got some of the largest investments by US tech giants. Earlier this month, Microsoft unveiled a $17.5 billion plan to expand AI and cloud infrastructure in India by 2029, including new hyperscale data centres and national skilling programmes. The very next day, Amazon announced $35 billion of additional investment in India by 2030, focused on AI, cloud, exports and logistics. Google has already committed over $15 billion to build AI and data capacity in India, adding to its earlier India Digitisation Fund. In total, over $65 billion of fresh US investment was pledged in under two days. Most of this money is being directed toward hyperscale data centres, AI compute capacity, logistics networks, exports and workforce training.
The main reason behind such a spree of investments is AI. India is ranked 3rd globally in AI competitiveness which requires massive computing power, data storage and skilled engineers. India offers that with the largest pools of software and AI talents, at lower cost and with strong english proficiency. The demand of AI in India is accelerating as firms digitise operations and governments push digital public infrastructure. Another factor is the supply chain shift. After years of reliance on China, US tech firms are investing in India as the only large economy that combines scale, democratic institutions and geopolitical alignment with the US. The third factor is India’s market size, with the rapid growth in digital payments, e-commerce and cloud adoption. For firms entering late can lead to losing dominance to rivals firms, and entering early can lock in future revenues.
These investments can significantly reshape India’s digital economy. Large scale spending on cloud and AI infrastructure will only strengthen India’s position as a global technology hub. Hyperscale data centres and AI compute capacity improve digital infrastructure, making it cheaper and faster for Indian firms, startups and MSMEs to adopt advanced technology. This will also increase employment, they generate high quality jobs in AI engineering, cloud management, cybersecurity, logistics, and allied services. This can also boost exports of digital services and strengthen India’s balance of payments. For the US, deeper tech investment in India also helps counter China’s dominance in digital infrastructure and supply chains in Asia.
Despite these economic benefits, important risks and concerns remain. Heavy reliance on foreign cloud providers raises questions about data sovereignty and strategic autonomy. With global hyperscalers like AWS, Azure and Google Cloud dominating infrastructure, India must ensure that sensitive data and critical digital services remain secure under domestic law. There is also a potential crowding-out effect, where large foreign players could overshadow domestic cloud firms, making it more difficult for local providers to scale and compete.
The timing of these investments is interesting considering the recent strain in bilateral relations of India and the US. The two sides have disputes over digital taxes, data localisation, antitrust scrutiny of Big Tech and broader trade policy disagreements that have created greater uncertainty for companies operating across borders.
However, the recent investments do show how economic imperatives and competitive positioning may hold the ability to override political friction. India’s large market, skilled workforce and leadership ambitions in AI make it one of the most attractive destinations for US giants. The scale of these investments suggests that both the countries see mutual benefit in deeper collaboration, even as diplomatic tensions continue.
