The world’s technology leaders are pouring tens of billions of dollars into India in their quest to lead the new technology space of artificial intelligence. India has an enormous digital population and a number of supportive policies helping to attract the likes of Google, Microsoft and Amazon, which are vastly expanding their data centre and cloud infrastructure capacity in India.
At the heart of this momentum is India’s newly enacted 20-year tax holiday on any overseas revenue generated through global data services based out of India. This will serve as the basis for encouraging the establishment of India as a major global hub for A.I. services and cloud computing.
“This opportunity will turn India into a major A.I. hub in the world,” said the Indian Minister for Information Technology – Ashwini Vaishnaw.
Why India is so important to Big Tech
India offers three main benefits.
One, scale. With a total population of over 1.4 billion people, India has one of the largest digital user bases in the world. Furthermore, Indians consume more mobile data per smartphone than any other geographic location in the world, and over 60% of all Indian smartphone users are already using generative A.I. technology.
Two, regulation. The new data laws in India are compelling companies to store all Indian user data within India, which means that India’s domestic data centres will be essential for any foreign based company.
The third factor is the cost of land, labour and growing renewable energy capacity. In comparison to Western Markets, India has no doubts in offering lower cost alternatives.
The reason these businesses have made major long term commitments to India ($15 billion from Google, $17.5 billion from Microsoft, $35 billion from Amazon) is because of these advantages.
India’s Strategy
India is positioning itself to become a global AI services powerhouse instead of a competitor to current frontier model builders such as OpenAI.
Officials contend that pursuing extremely costly foundational models would unnecessarily deplete resources. India instead seeks to develop affordable AI solutions for healthcare, governance, agriculture and business.
Additionally, India seeks to serve as a model for other developing countries that possess large digital populations.
Concerns over power, water, and jobs are growing.
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Growing concerns: power, water, and jobs
Though the optimists are full of hope, many challenges still exist.
A data centre consumes vast amounts of power and water. Environmental groups point to the inability for water stressed cities such as Bangalore and Hyderabad to continue providing water to data centre users; in addition their power grids are already heavily overloaded.
Job concerns – Where new jobs created by Data Centres will be much less than Data Services’. Many of these projects will not help to provide employment for the millions of graduates emerging each year.
Local communities fear that they would be paying for Corporate infrastructure, through diverted public spending away from the community.
India’s own Economic Survey has indicated the existing infrastructure spend on AI may create other risk issues (Financial Risk) as AI infrastructure Scales and becomes more prominent there may be a high-risk association due to dependency on multiple factors: imported chips, foreign investment and Global supply chain.
If the pace of Global Investment decreases or geopolitical issues arise, this can create a risk associated with dependency.
Experts have provided examples of how excess scale and/or lack of stability can create additional breakdowns in economic confidence.
Big Tech AI development in India will provide India with opportunities to take the next step (Leadership in digital economy, export income and technological upgrades) but will also have significant risks/concerns associated with energy, Economic inequality and financial exposure.
The answer will be how to achieve the balance between ambition and discipline.
If successfully integrated AI will create a positive Economic impact for India, however if rushed and without protective measures it can create a high-stress point for India going forward.
The decision must now be between NUMBERS to create a headline now or create a stable outcome.
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