This week, Amazon and Microsoft announced staggering combined investments of over $50 billion in India, putting artificial intelligence (AI) at the forefront of the country’s tech ambitions.
Microsoft CEO Satya Nadella revealed a $17.5 billion investment, its largest ever in Asia, to build infrastructure, enhance skills, and strengthen India’s sovereign AI capabilities. Amazon followed with over $35 billion pledged through 2030, including significant support for AI development.
The timing is notable. Amid global concerns about an AI bubble and soaring tech stock valuations, some analysts view India as a “reverse AI trade.” Jefferies’ Christopher Wood noted that Indian stocks could outperform if global AI enthusiasm cools. HSBC echoed this, describing Indian equities as a hedge against volatility in AI markets.
Mumbai’s stock market has lagged behind Asian peers, as investors previously focused on Korea and Taiwan. The new investments from Amazon and Microsoft provide a boost, yet questions remain about India’s position in the global AI race.
Adoption has been swift in some areas, like data centers and chip-making facilities. Intel recently announced a partnership with Tata Electronics to manufacture chips locally. But India’s ambition for a sovereign AI model is still catching up. The government’s AI mission aims to support start-ups, universities, and researchers with advanced computing for a homegrown AI system capable of handling over 22 languages.
Still, India’s $1.25 billion initiative is small compared with France’s $117 billion or Saudi Arabia’s $100 billion programs. Challenges include limited semiconductors, fragmented data ecosystems, and a need for skilled talent retention. While India has 2.5 times more AI-skilled professionals than the global average, incentives to retain them are still evolving.
Despite hurdles, India shows promise. The Stanford AI Index 2025 ranks the country among the top five for new AI investments. Last year, 74 Indian AI start-ups received funding, raising $1.16 billion—modest compared to the US ($100 billion) and China ($10 billion).
Experts argue India’s advantage lies in using AI for downstream applications rather than building massive language models. AI-powered consumer apps are rising, doubling start-up investments compared with last year. Initiatives like MahaVISTAAR, which delivers agricultural information in Marathi to over 15 million farmers, show AI’s real-world potential.
However, AI could disrupt India’s IT services sector, a backbone of the economy.
India’s AI future is promising but requires careful investment, policy support, and infrastructure development to remain competitive globally.
