NEW DELHI — As the global race to dominate the artificial intelligence industry accelerates, the giants of Silicon Valley are promising to pour billions of dollars into India.
Amazon, Microsoft and Google have pledged a combined $67.5 billion in Indian investments since October. Eighty percent of those commitments have come this month. Much of the cash is earmarked to build massive data centers to process chatbot queries; other initiatives include training programs for domestic software talent and a push for greater AI use among small businesses. (Amazon founder Jeff Bezos owns The Washington Post.)
OpenAI, the creator of ChatGPT, and its rival Anthropic, the maker of Claude, have both opened offices in India this year. (The Post has a content partnership with OpenAI.) A revolving door of top tech executives, from Microsoft’s Satya Nadella to Intel’s Lip-Bu Tan, have met with Indian Prime Minister Narendra Modi this month to speak about AI and semiconductors. In February, the country will host an international AI summit — the first to be held in the global south, according to the Indian government.
It comes amid a frenzy of spending and expansion in the broader AI industry and mounting fears of a tech bubble. Big firms are spending billions of dollars to build their own infrastructure and lure users to their chatbots and AI-enhanced tools. And India — with more than 1 billion internet users and a wealth of software talent — is emerging as a must win-market, financial analysts say.
“In Silicon Valley, everyone knows right now: It’s ‘game-on’ in India,” said Dan Ives, managing director of Wedbush Securities.
Tech leaders are promising an array of benefits. They say data center investments will create jobs; students will find chatbots essential for homework and exam prep; AI tools will make large and small businesses more efficient and profitable. “The AI opportunity in India is immense,” Sundar Pichai, chief executive of Google holding company Alphabet, said in August.
But behind the gaudy investment figures and rosy projections there are real reasons for concern, according to AI scientists, human rights experts and internet freedom activists. The primary worry revolves around the construction of data centers, which require massive amounts of power and water, and could lead to shortages in Indian communities already facing a resource crunch, environmentalists warn. Economists fear the widespread adoption of AI could also disrupt the labor market, especially India’s hugely important outsourcing industry.
Silicon Valley companies are outpacing attempts by Indian engineers to build their own language models, and Beijing has better control of hardware supply chains — putting both countries ahead of India in the AI race, said Apar Gupta, founder of India’s Internet Freedom Foundation. He also noted that India’s consumer market is highly price sensitive, and the millions of users U.S. firms are banking on might not be willing to pay the premium for their AI tools.
“It’s like many moon shots,” Gupta said of Silicon Valley’s AI strategy for India. “Part of it is hypothesis. Part of it is aspiration.”
A looming ‘disaster’
The AI push in India is likely to start with a surge in data center construction.
Microsoft’s Dec. 9 announcement of a $17.5 billion investment in India — its largest ever in Asia — included a plan to build a sprawling data center complex in the southern city of Hyderabad. Set to go live in mid-2026, the company estimates it will be roughly the size of two major sporting stadiums.
Google is also planning a formidable physical presence. The company said in October it will invest $15 billion in India between 2026 and 2030. The centerpiece will be a 1 gigawatt-scale data center in the southeastern city of Visakhapatnam, in Andhra Pradesh state, which has already allocated 480 acres of land to the project, according to local government records obtained by The Post.
Raj Reddy, a professor of computer science at Carnegie Mellon University, said data centers are crucial for companies racing to train and improve their large language models. And they can be built far more cheaply here than in the United States, especially if Indian authorities are willing to subsidize the cost.
“It is truly a question of economics,” Reddy said. “If you can get the same solution for 50 percent of the price, or 70 percent of the price as in the USA, then you would set it up there.”
But data centers place a significant strain on local energy and water supplies, which has contributed to a growing grassroots backlash across the U.S. — and could create even more acute pressures in the world’s most populous nation.
Already, activists in Visakhapatnam are lining up against Google’s data center project. They complain that the cash subsidies green lit for the project — up to $2.4 billion, according to the government records — will divert public funds from health care, education and rural development. Additionally, they say, the region faces groundwater shortages, erratic rainfall and an overburdened power grid.
“This project represents a looming environmental and economic disaster,” the Indian-based Human Rights Forum said in an October statement, “deepening corporate capture of resources under the guise of technological advancement.”
Google did not respond to a request for comment. Andhra Pradesh’s chief minister and the state’s IT Ministry did not respond to requests for comment.
‘Why pay for it?’
Silicon Valley’s other major push in India is for users, as analysts warn that tech companies continue to rack up expenses without a path to profitability. JP Morgan calculated in November that the tech industry must generate an extra $650 billion in revenue every year if AI investments forecast through 2030 are to earn even a modest 10 percent return, according to the Financial Times.
Sam Altman, chief executive of OpenAI, said in August that India is already ChatGPT’s second largest market. It is also the second largest market for Anthropic’s Claude large language model, accounting for 7 percent of global users, a September company report showed.
Expanding in India may be particularly vital for OpenAI, analysts said. ChatGPT is still the world’s most popular chatbot, with 800 million users. But the number of users on the ChatGPT mobile app plateaued this summer.
To capture more Indian subscribers, OpenAI has offered a 12 month free trial for its lower-tier “ChatGPT Go” subscription, which costs roughly $5 per month and offers limited access to its higher end models.
The company sees education as its most promising frontier. India has the largest population of students on ChatGPT worldwide, the company told The Post, and people between 18 and 24 are the most active users.
But Gupta, of the Internet Freedom Foundation, said it will be difficult to get customers here to pay for subscriptions, noting the cost of its lowest-tier membership is similar to a monthly cellphone data plan. To attract new users at scale, he said, tech companies will need to demonstrate that AI tools are integral to daily life.
“Is it as indispensable as social media is to many people’s lives today?” Gupta said. “Why would a person pay for it?”
Global competition
India’s own ambitions in the competition for AI supremacy are still coming into focus.
The Indian government has committed just $1.2 billion toward AI development — a fraction of the amount being spent in the country by top U.S. firms. A major feature of the government’s plan is the purchase of more than 18,600 high-end computing chips, called GPUs, that help power the creation and training of large language models.
Anirudh Suri, a tech expert and nonresident scholar at the Carnegie Endowment for International Peace in New Delhi, said it remains to be seen if India will become a major global player in AI, with the country lagging well behind Washington and Beijing in infrastructure and investment.
“Trying to become like the U.S., or trying to become like China today … I don’t think that’s necessarily something that you just switch on a tap and it happens,” he added. “It requires the foundational pieces to be in place for any country to succeed.”
India must also consider the implications of AI for its own job market. The country’s $283 billion IT sector employs millions of call center and customer service hotline workers, which analysts say will be among the first eliminated by automation.
Suria said AI will ultimately replace a “big chunk” of low-level call center and coding jobs in India, the kind many young Indians take out of college to launch their careers.
“It’s indeed a concern,” he said. “The traditional entry-level jobs that AI can easily replace will definitely be fewer and far between.”
Supriya Kumar and Gerrit De Vynck in San Francisco contributed to this report.
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