It has been reported that OpenAI is set to construct a large-scale data center in India, a move that represents a significant milestone in its global AI infrastructure strategy.

Delving into OpenAI's potential massive investment in India, the company is poised to build a data center boasting a capacity of at least 1 gigawatt (GW). If realized, this endeavor is projected to rank among India's largest data centers. At present, the precise location and detailed timeline for the project remain undisclosed. Insiders hint that OpenAI CEO Sam Altman might unveil this plan during his South Asia visit this month (September 2025), though the itinerary is subject to change. OpenAI representatives have refrained from commenting on the matter.

So, what prompts OpenAI to choose India?

OpenAI's decision is likely rooted in a multitude of factors. Firstly, the allure of a vast user base. India stands as OpenAI's second-largest user market globally, characterized by a substantial existing user base and significant growth potential.

Secondly, India offers favorable local policies and cost advantages. The Indian government has unveiled a $1.2 billion national AI initiative, the "IndiaAI Mission," and provides policy incentives for data center construction, including a 50% reduction in land value and a complete waiver of stamp duty. Reports suggest that constructing a data center in Mumbai can be over 30% more cost-effective than in Tokyo or Sydney.

Thirdly, the imperative of data compliance and localization. Establishing a data center within India enables the retention of user data within the country, fulfilling data sovereignty and compliance requirements while facilitating the provision of customized AI tools and services tailored to local users.

Fourthly, India has long held a pivotal position in the global strategic landscape. This move aligns with OpenAI's global AI infrastructure expansion, complementing its "Stargate" project in the U.S., and initiatives in Norway and Abu Dhabi, and in harmony with its "OpenAI for Nations" vision.

However, OpenAI is not the sole tech giant optimistic about India's AI infrastructure market. From the vantage point of global tech giants' strategic investment in India, the country has emerged as a new hotspot.

Microsoft, in January 2025, announced plans to invest $3 billion in India over the next two years to expand its Azure cloud services and AI businesses, with the ambition to train 10 million Indians in AI-related skills by 2030.

Google, in July 2025, revealed plans to invest $6 billion in constructing a 1GW data center in Visakhapatnam, southern India, including $2 billion earmarked for renewable energy development. This will rank as one of the largest data centers in Asia in terms of both capacity and investment. The establishment of such a colossal data center in Visakhapatnam (Andhra Pradesh) will bolster Google's cloud computing and core services, fortifying its AI cloud solutions.

Evidently, India is transforming into a new AI hub, attracting intense competition from global tech giants, with the rivalry extending from algorithms and models to the construction and strategic deployment of underlying infrastructure.

Should OpenAI's India data center project proceed smoothly, it could significantly enhance India's AI capabilities. OpenAI has pledged to participate in the Indian government's "IndiaAI Mission," bringing cutting-edge AI technologies, computational resources, and ecosystem-building expertise to India, thereby fostering the development of local large language models and vertical applications.

Concurrently, it will intensify market competition in India. OpenAI's foray will inevitably lead to heightened competition with Microsoft, Google, and other tech giants already deeply invested in India across domains such as cloud services, AI model access, enterprise clients, and talent acquisition.

Nevertheless, this will also spur localized innovation. To capture the Indian market, OpenAI must introduce products and services more attuned to local languages, cultures, and usage patterns. Its planned $5 low-cost subscription plan exemplifies this approach.

Despite the burgeoning interest of global tech giants in investing in India, they also confront challenges and uncertainties. Projects face hurdles such as the current intricacies of U.S.-India trade relations and the inherent uncertainties associated with large infrastructure projects, encompassing site selection, energy supply, and construction timelines.

What are your views on global tech giants investing in India?