American tech giants commit billions amid frosty Indo-US relations
American technology giants are lining up with investment commitment in India. These investments run into billions of dollars. Google has announced that it would invest around $15 billion over the next five years to establish its first AI hub and a gigawatt-scale data centre in Visakhapatnam. Interestingly, this is the largest investment plan of Google outside of the US. Not to be left behind, Microsoft has also announced that the company would invest around $20 billion in the coming years.
These investments will be utilised for building AI infrastructure and cloud capacity expansion in the country. Following in their footsteps, Amazon has unveiled huge investments plans in India across businesses. More than $30 billion of investment will be infused into its various businesses by 2030 with a significant portion earmarked for AI infrastructure, related to Amazon Web Services (AWS). This implies that around $65 billion investments will be infused into the technology sector over the next five to seven years by the three technology majors.
Natural curiosity demands to evaluate the timing of such announcements. Ironically, these are happening at a time, when India and the US relationship are not in the pink of health. Under the Trump administration, decades of warm relationship have gone downhill as the White House has imposed a punitive 50 per cent tariff on India. Free movement of techies has also been curtailed as entry fee of a new applicant seeking H1B visa has been increased to a mindboggling $100,000. Most of the measures to check immigration seem to be targeted at Indian immigration. So, when the US administration is trying everything to alienate India, one wonders why and how technology giants are committing huge amounts of investments. The reasons are many.
Firstly, there are key geostrategic reasons, which are driving such decisions. The US tech majors have a dominant position in the Indian tech scene. From Google, Microsoft, Amazon and Meta to others, Indian consumers and enterprises are hooked to American products, services and platforms. In the recent past, New Delhi has made its intention clear that it would promote indigenously developed platforms. Many Union ministers have started adopting Zoho’s multiple platforms, which directly replace several Microsoft products.
Such a move has come as a wakeup call for tech giants, which don’t want to lose India as it is a flourishing market. Moreover, US tech giants have considerably less access to the Chinese market, while the European market access is subject to unprecedented regulatory scrutiny. Even the US-Europe relationship is facing headwinds. In this context, the American majors don’t want to leave their dominant positioning to any other player due to policies of the current administration. The big investment announcement should be seen in that context.
Secondly, as the AI (artificial intelligence) wave sweeps the world, top tech firms are increasingly seeing India as an important geography to be in. Data is the life blood of AI platforms-be it LLMs (large language models) or specific data platforms. Data can only be collected when customers use it. India, with its huge tech-savvy population, remains at the forefront of any tech adoption. And AI is no exception. Be it OpenAI’s ChatGPT or Google’s Gemini AI, India remains one of the fastest growing geographies with a huge mass of users.
These users provide crucial consumer data for the LLMs to be efficient. Now, when the world is moving towards an AI economy, how can these companies ignore a large market like India. Lastly, India has one of the largest technology talent pools in the world with many global companies are being headed by people of Indian origin. This makes the country a crucial and sound choice both in terms of large market and huge supply base. Given such deep engagement levels between Indian and US tech ecosystems, no amount of coercion will be enough to make the decoupling possible.
