Microsoft-backed OpenAI to Establish New Data Center in India

Microsoft-backed OpenAI is planning a new data center in India, marking the company's first major investment in the country. The data center will help expand OpenAI's operations and enhance its services in the region. This move comes as India continues to grow its technology sector, with a focus on data centers and cloud computing.

Title: OpenAI's Strategic Expansion into India: A New Data Center in the Offing

Microsoft-backed OpenAI is planning a significant investment in India with the establishment of a new data center. This move marks the company's first major foray into the country, aiming to bolster its operations and enhance services in the region. The data center, expected to have at least 1 gigawatt capacity, is part of OpenAI's broader strategy to expand its Stargate-branded artificial intelligence infrastructure [1].

The announcement comes as India continues to grow its technology sector, with a particular focus on data centers and cloud computing. OpenAI's plans align with India's ambitious digital sovereignty ambitions and its push to decentralize global supply chains. The company has already registered as a legal entity in India and has begun building a local team, with plans to open its first India office in New Delhi later this year [1].

OpenAI's expansion in India is not just about scaling compute capacity; it is a strategic response to the U.S.-China AI rivalry and India's digital sovereignty ambitions. By partnering with the IndiaAI Mission, OpenAI aims to deploy 18,000 GPUs and co-develop AI tools tailored to Indian languages and cultural contexts. This collaboration is part of a broader $1.25 billion government push to support AI development in the country [2].

The proposed data center is expected to reduce latency and ensure compliance with India's stringent data localization laws under the Digital Personal Data Protection Act (DPDPA). Hyderabad, with its growing tech ecosystem, is a prime candidate for the data center, signaling a long-term commitment to the market [2].

OpenAI's strategic expansion into India is also part of a broader geopolitical alignment. The U.S.-India TRUST (Transforming the Relationship Utilizing Strategic Technology) initiative provides the scaffolding for this expansion, addressing critical bottlenecks such as U.S. AI Diffusion Rules that restrict India's access to advanced GPUs [2]. This partnership aims to accelerate AI infrastructure development while countering China's dominance in semiconductor manufacturing.

The establishment of the data center is part of OpenAI's Stargate initiative, a $10+ billion project to build AI-optimized infrastructure worldwide. This move reflects a broader pivot to secure compute capacity amid global competition. OpenAI's recent 4.5 gigawatt partnership with Oracle, which brings total Stargate capacity to over 5 gigawatts, underscores the company's urgency to outpace rivals like Google and Microsoft in the AI arms race [3].

While the exact location and timeline of OpenAI’s proposed India project remain uncertain, CEO Sam Altman may announce the facility during his visit to the country in September [1]. This move is not only about building a data center but also about constructing a blueprint for AI infrastructure in emerging markets, where the next wave of innovation and adoption is likely to emerge.

For investors, the key metrics to watch include OpenAI’s GPU deployment timelines, TRUST Initiative policy updates, and the success of localized offerings like ChatGPT Go. The IndiaAI Mission’s $1.25 billion investment and the 800% surge in AI-related in-app purchases since 2024 suggest a resilient market [2].

In the long term, OpenAI’s India expansion could redefine global AI dynamics. By aligning with India’s tech ambitions and U.S. strategic interests, the company is not just building data centers—it is constructing a blueprint for AI infrastructure in emerging markets.

References:
[1] https://finance.yahoo.com/news/openai-plans-india-data-center-060235364.html
[2] https://www.ainvest.com/news/openai-india-data-center-expansion-strategic-pivot-global-ai-infrastructure-arms-race-2509/
[3] https://www.chinadaily.com.cn/a/202509/01/WS68b598a0a3108622abc9e4fb.html