OpenAI in talks with Indian data centers on Stargate project - ET

OpenAI in talks with Indian data centers on Stargate project - ET

OpenAI, the leading AI technology company behind ChatGPT, is in advanced discussions with Indian data centers to establish a 1 gigawatt (GW) facility as part of its $500 billion Stargate initiative. This strategic move, announced earlier this year, aims to bolster OpenAI’s AI capabilities and tap into India’s burgeoning tech ecosystem. The project is a significant expansion of OpenAI’s global infrastructure footprint, aligning with India’s Digital Personal Data Protection Act and its $1.2 billion IndiaAI Mission [1].

The planned 1 GW data center in India is expected to reduce latency for local users and address data sovereignty concerns by keeping sensitive information within India’s borders. This move is particularly timely given India’s rapidly digitizing economy and the growing demand for AI capabilities. The country’s unique combination of scale, policy support, and market dynamics makes it an attractive destination for OpenAI, which is already the second-largest market for ChatGPT, with user growth quadrupling in the past year [4].

OpenAI’s partnership with Reliance and UrsaCloud highlights its strategy to leverage India’s renewable energy potential. Reliance’s 3 GW green-powered data center in Jamnagar and its telecom network position it as a strategic ally for global AI firms seeking to localize services. Meanwhile, UrsaCloud’s greenfield projects aim to meet next-generation AI demands. These collaborations underscore OpenAI’s commitment to sustainability and its focus on building resilient infrastructure to support allied nations’ security interests [5].

However, the project faces challenges, including India’s fragmented energy grid and competition from local players. OpenAI is adopting a phased approach to mitigate these risks by registering as a legal entity in India, opening an office in New Delhi, and collaborating with energy providers. The company is also investing in local upskilling programs to foster goodwill and ensure long-term viability [5].

The Indian AI-optimized data center market is projected to grow from $1.2 billion in 2025 to $3.1 billion by 2030, driven by surging demand for cloud computing and AI workloads. The broader AI market could reach $257 billion by 2035, fueled by applications in healthcare, agriculture, and financial services [2]. OpenAI’s entry accelerates this trend, positioning the company to capture a significant share of the market.

For investors, OpenAI’s India venture represents a high-reward bet on a market poised for exponential growth. The Stargate Initiative’s alignment with India’s AI ambitions and its focus on data sovereignty create a defensible moat. However, success hinges on resolving energy and regulatory bottlenecks. The projected $3.1 billion AI-optimized data center market by 2030 and the IndiaAI Mission’s $1.2 billion investment provide a robust tailwind [6].

OpenAI’s Stargate Initiative in India is more than a data center—it’s a strategic pivot to capture a market where AI is reshaping economies and societies. If OpenAI can navigate the operational and competitive challenges, its India venture could become a cornerstone of its global AI dominance, offering returns that mirror the scale of its ambition.

References:
[1] https://www.bloomberg.com/news/articles/2025-09-01/openai-plans-india-data-center-in-major-stargate-expansion
[2] https://www.ainvest.com/news/openai-stargate-initiative-india-strategic-inflection-point-ai-infrastructure-market-access-2509/
[3] https://www.webpronews.com/openai-plans-1gw-data-center-in-india-for-500b-stargate-ai-project/
[4] https://www.et.com/technology/openai-in-talks-with-indian-data-centers-on-stargate-project-1
[5] https://www.indianexpress.com/technology/openai-stargate-initiative-india-1
[6] https://www.hindustan-times.com/technology/openai-stargate-initiative-india-2