Microsoft has launched its largest data centre in India, marking a major expansion of its presence in the country's fast-growing artificial intelligence (AI) market as it competes with Google and Amazon to strengthen its cloud infrastructure. The new India South Central cloud region in Hyderabad was inaugurated on Thursday and is already serving major clients, including the Adani Group and HDFC Bank.
With the addition of the Hyderabad facility, Microsoft now operates four cloud regions in India, alongside its existing data centres in Pune, Chennai and Mumbai, making it the country's largest cloud infrastructure provider.
The expansion comes as global technology giants invest billions of dollars in India, betting on the country's large internet user base, thriving startup ecosystem and increasing AI adoption to fuel the next phase of cloud computing. Microsoft has committed around $20.5 billion towards expanding its operations in India, making the country one of its biggest investment destinations outside the United States.
Cloud infrastructure forms the backbone of AI services, enabling companies to train AI models, process vast amounts of data and run AI-powered applications with minimal latency. By expanding its local infrastructure, Microsoft aims to attract businesses seeking to store and process their data within India.
The company said its Azure cloud business has recorded double-digit revenue growth in India over the past two years, reflecting strong demand from enterprises shifting their workloads to the cloud. Microsoft also operates two additional data centres in partnership with Reliance Jio, further expanding its footprint in the country.
Puneet Chandok, President of Microsoft India, said local infrastructure is crucial for accelerating AI adoption.
"Creating value with AI requires trusted infrastructure close to where data lives, teams work and decisions are made," Chandok said, adding that the Hyderabad facility "is a critical part of that foundation."
GOOGLE AND AMAZON ALSO EXPANDING IN INDIA
Microsoft's latest investment comes as Google and Amazon continue to expand their own data centre capacity in India, viewing the country as one of the world's most promising AI markets. However, not all projects have progressed smoothly.
Google's proposed $15 billion hyperscale data centre hub in Visakhapatnam, Andhra Pradesh, has faced increasing opposition from environmental groups. Activists argue that the project could intensify water shortages and affect nearby wildlife habitats, with recent protests carrying slogans such as "We cannot drink DATA."
The project, being developed in partnership with the Adani Group, is also facing legal challenges over concerns related to water consumption and its proximity to the Kambalakonda Wildlife Sanctuary.
Google has defended the project, saying it will comply with all applicable laws and use advanced air-cooling technology to minimise water usage. The Andhra Pradesh government has also denied allegations that the project was approved without adequate environmental scrutiny, while stating that it remains open to addressing genuine public concerns.
The debate reflects growing global concerns over the environmental impact of AI infrastructure. Modern data centres require significant amounts of electricity and water for cooling, prompting similar protests in several countries, including the United States.
