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India’s AI Aspirations Raise Multibillion Investments

Currently, India is striving to develop as a kind of technological center and is making concrete efforts in a practical dimension aimed at achieving the corresponding goal, which already has certain results in the form of investments from companies belonging to the Big Tech category from abroad.

India’s AI Aspirations Raise Multibillion Investments

New Delhi, which declared intention for what can be described as technological evolution, offers overseas firms various incentives to carry out activities in the South Asian country. It is worth noting that India as a market is an up-and-coming space due to circumstances that can be described as quite objective. Currently, the South Asian country is experiencing dynamic growth in the technology sector. The corresponding process is largely determined by the current state of affairs in the plane of geopolitical relations. Amid rising tensions between Beijing and Washington, many companies are seeking to diversify their activities outside China, but at the same time maintain a presence in Asia, which is now characterized by many experts and representatives of Big Tech as the most promising space for efforts. In this context, India is one of the most appropriate choices. Returning to the topic of striving for diversification within the borders of Asia, it is worth noting that the main incentive for such decisions is concerns of harsh sanctions from the United States against China, which can significantly worsen business opportunities. It is also worth noting that Washington has already restricted Chinese companies’ access to advanced chips and equipment necessary for the production of related products.

India has more than a significant chance to become a beneficiary of the current configuration of reality in the space of geopolitical relations. It is worth noting that the process of moving New Delhi to an appropriate position, which provides significant advantages for the technology sector, the economy and, as a result, the condition of the social environment has already begun. For example, in October it became known that HP will produce Chromebooks in India. In July, Applied Materials, a US manufacturer of equipment used for making chips, announced its intention to expand its operations in the South Asian country.

Moreover, the Government of India has provided financial support for the development of the technology sector. In February, the leadership of the South Asian country decided to allocate more than $15 billion for the construction of chip manufacturing plants.

As for the advantages of India as a market or as a space of opportunities and prospects, in this case, attention should be paid to the demographic situation. The South Asian country currently has a population of more than 1.4 billion, according to the United Nations. This fact in itself forms what can be called a guarantee of market demand.

India is expected to become the largest consumer and exporter of artificial intelligence. This is the opinion, among others, of Nvidia Chief Executive Officer Jensen Huang. The mentioned company is the world’s main supplier of graphics processing units (GPUs), which are necessary for the training and subsequent operation of artificial intelligence systems. In September, during a visit to India, Jensen Huang expressed his confidence that one of the largest AI markets will be formed in this country. Also, as part of the mentioned visit, he discussed with researchers the retraining of the local workforce and the implementation of projects to develop artificial intelligence systems involving the participation of India’s talents and the use of regional data arrays.

This week, the media reported on the investments of Amazon and Microsoft in India. The developer of the Windows operating system, as part of the relevant decision, allocates funding for about $3.7 billion. This investment is aimed at the construction of data processing centers in the state of Telangana, located in the southern part of India. Microsoft plans to increase its IT capacity by 660 megawatts. The mentioned figure is equivalent to the annual electricity needs of approximately 500,000 households in Europe.

Amazon, which is an e-commerce giant that owns the best American delivery service, but at the same time is already one of the largest players in the global technology sector as a result of the large-scale activities of its AWS unit, plans to invest about $12.7 billion in India. According to media reports, the mentioned funds are intended for the development of cloud infrastructure in the South Asian country. Amazon’s respective intentions are expected to be realized before the end of the current decade.

Puneet Chandok, president of Microsoft in India and South Asia, said during a conversation with media representatives that India is currently one of the most exciting technology markets in the world. According to him, the goal of the specified company is to continuously increase the capacity in this part of the world to serve customers who innovate not only in the South Asian country but also globally.

Likely, the current efforts of technology companies to build their own data centers in India will make this country a leader in terms of possibilities for the construction of such functional facilities.

It is worth noting that Microsoft and Amazon are already actively cooperating with the South Asian country. In addition to the mentioned investments, these companies have by now allocated $40 billion since the beginning of the current year for the implementation of projects in the area of artificial intelligence infrastructure.

In May, Nvidia said that demand for its products is largely driven by firms and countries that are moving from traditional data centers to so-called AI factories. In the first quarter of 2024, this company collaborated with more than 100 customers who built the specified factories ranging in size from hundreds to tens and even hundreds of thousands of GPUs. This was told by Nvidia Executive Vice President and Chief Financial Officer Colette Kress on an earnings call.

Big technology companies are interested in increasing their capacities in the cloud computing area since in fact this indicator determines the opportunities for progress in the struggle for dominance in the artificial intelligence industry. It is worth noting that the relevant efforts are being implemented at the global level, which means investing in appropriate goals in different regions of the world. Since the beginning of the current year, Microsoft, Google, and Amazon have announced investments totaling at least $85 billion in infrastructure, primarily in data centers, in several countries including Singapore, Japan, the United States, and Saudi Arabia.

Structure Research predicts that the rapid pace of the company’s activities in constructing its own data centers in India will contribute to the fact that this South Asian country will rise from sixth place to first in terms of the number of self-built capacities in the Asia-Pacific region. It is worth noting that in this case, the capacities built by third parties are not taken into account. Most often, such facilities are initially intended for leasing to Big Tech groups and smaller companies.

Industry research groups Structure, TeleGeography, and Dgtl Infra also expect large-scale data center expansion in Germany and the United States, including northern Virginia, in the short term.

All specified projects are promising, as the demand for artificial intelligence-based products and services is currently on a growth trajectory. AI is also becoming an increasingly common working tool. For example, in the United States, in a special survey, 63% of financial officers said that artificial intelligence technologies had reduced their need for low-skilled workers. Another 58% of financial chiefs said they needed more skilled employees with analytical abilities.

Many organizations have already integrated artificial intelligence into their workflows, but the corresponding process is still at an early stage. This means that in the future, the scale of AI distribution will expand many times. The need for artificial intelligence will grow, which will form significant prospects and opportunities for all parties involved in projects for the development of AI infrastructure.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.