Microsoft has announced plans to invest $3 billion in India over the next two years. This investment will focus on cloud and artificial intelligence (AI) infrastructure, along with training initiatives. As part of the plan, Microsoft will set up new data centres. Satya Nadella, the company's chairman and CEO, shared this news on Tuesday. Microsoft is joining other global tech giants in focusing on the growth of India’s digital economy.

Nadella, who was born in Hyderabad, visited Prime Minister Narendra Modi on Monday as a part of his two-day trip to India. The company based in Redmond stated that the investment is meant to speed up AI development in India, which is crucial for reaching Prime Minister Narendra Modi’s goal of making India a developed nation (Viksit Bharat) by 2047. Microsoft will also help boost the country's future competitiveness by training 10 million people over the next five years with AI skills through the second edition of its Advanta(i)ge India programme. “India is rapidly becoming a leader in AI innovation, unlocking new opportunities across the country. The investments in infrastructure and skills we are announcing today reaffirm our commitment to making India AI-first and will help ensure people and organisations across the country benefit broadly,” Nadella remarked during a company event in Bengaluru. 

The event was attended by nearly 2,000 people, specifically developers, tech executives, and startups. “I had a chance to meet Prime Minister Modiji yesterday, and it was great to listen to all his examples and his vision of driving the AI mission,” Nadella added. According to Nadella, the "India Stack," or the nation's digital public infrastructure, the entrepreneurial spirit, Modi's policies, and the demographics of both consumers and businesses combine to produce a positive feedback loop. “That’s why we feel fantastic about bringing core compute capability for the next generation AI.”

Nadella mentioned that in the next two to ten years, the focus will be on understanding the relationship between GDP growth, whether at a country or industry level and how effectively that growth is achieved. “For that, infrastructure needs to be the highest priority, and we are innovating in every layer of it,” said Nadella. “There is a significant investment and innovation happening through us and our partners. I think of this as the golden age for systems when it comes to innovation.” 

Microsoft is competing in the AI and cloud computing race alongside companies like Google and Amazon Web Services (AWS). India has become an important market for these tech giants, who have invested billions of dollars over the last 20 years to build and expand their operations in the country. With a population of 1.4 billion, India is becoming a key battleground for AI development. In 2023, Amazon announced plans to invest $12.7 billion in its India business by 2030. In 2024, Nvidia Corp made a deal with Mukesh Ambani's Reliance Industries to develop AI computing infrastructure and create an innovation centre in India, according to Nvidia's CEO, Jensen Huang. 

Microsoft is already experiencing a growing demand for its technologies in India. Some of its customers include companies like Infosys, Air India, Apollo, Bank of Baroda, Federal Bank, Cognizant, Zomato, MakeMyTrip and IndiGo. For example, the IT firm Persistent is using Microsoft 365 Copilot's "Contract Assist" to reduce the time spent on contract negotiations. “In the last 12 months, Microsoft has been a copilot in making AI a reality in India, taking it from boardrooms to classrooms, commerce to communities, and finance to farmers,” said Puneet Chandok, president, of Microsoft India and South Asia.

“Today’s announcement strengthens our belief in India’s potential and our resolve to equip the country with the resources and future-ready skills needed to excel in the global marketplace. We will continue to use AI to unlock possibilities for the next few decades and ensure communities across the country have access to the computing they need to prosper in the AI era,” said Chandok.

AI will be key in helping India achieve its goal of a $1 trillion digital economy by 2028, which is expected to contribute 20% to the country's GDP. A report by Google estimates that AI adoption could bring in Rs 33.8 lakh crore in economic value for India by 2030. Microsoft has stated that its investment reflects its growing role in AI leadership. The company will expand its cloud and AI infrastructure by building more data centres in India. Microsoft already has three data centre regions in the country, with the fourth expected to launch in 2026. This investment will help create a scalable AI computing system to support the growing number of AI startups and research efforts in India. 

As jobs change, AI is becoming an important skill for professionals. In 2024, Microsoft launched the Advanta(i)ge India initiative, aiming to train two million people in AI skills by 2025. However, Microsoft exceeded this goal ahead of schedule, training 2.4 million people in less than a year. Impressively, 65% of the participants were women, and 74% came from Tier-II and Tier-III cities.

On Tuesday, Microsoft announced a new goal: to help 10 million more Indians gain essential AI skills by 2030. Advanta(i)ge India is part of Microsoft’s Global Skills for Social Impact program, and these training sessions will be provided in partnership with the government, nonprofit and corporate organizations, and local communities. “Through the ‘AI for India’ mission, we aim to empower citizens with cutting-edge AI skills, driving innovation, creating jobs, and bridging the digital divide,” said Jayant Chaudhary, minister of state (independent charge), Ministry of Skill Development and Entrepreneurship. “Collaborations with global leaders like Microsoft and similar companies are pivotal in this transformation.”

In 2024, the Union Cabinet approved a Rs 10,371.92 crore budget for the 'India AI Mission' over the next five years. This initiative aims to boost innovation in artificial intelligence through partnerships between the public and private sectors. On Tuesday, Microsoft Research (MSR) Lab launched an AI Innovation Network to strengthen its role in developing the AI ecosystem in India. Through this network, MSR will form new partnerships, particularly with digital-native companies, to speed up the process of turning research into practical business solutions.

MSR India has started working with the edtech company Physics Wallah to focus on math reasoning. They are also in talks with other digital companies about subjects like causal inference, improving Indic large language models (LLMs), prompt optimisation, and reinforcement learning. “Our collaboration with Microsoft Research is a step towards creating tools that understand and support each student’s learning journey,” said Prateek Maheshwari, co-founder, Physics Wallah. “By combining our expertise with Microsoft’s advancements in AI and large language models, we’re working to make education more accessible, personalised, and impactful.”

Microsoft has partnered with SaaSBoomi, a leading community for B2B startups in India, to drive innovation and entrepreneurship, particularly in Tier-II cities. The partnership combines SaaSBoomi's broad network with Microsoft's technology expertise to make a significant impact. Over the next five years, their goals include supporting more than 5,000 startups and 10,000 entrepreneurs, training over 150,000 employees in startups through specialised workshops, promoting development in over 20 Tier-II cities, creating more than 200,000 new jobs, and attracting an additional $1.5 billion in venture capital for the Indian AI and SaaS ecosystem.