Why are AI Investments in India a Tiny Fraction of US Companies AI Spending
India may give billions in subsidies to global AI companies apparently without securing technology transfers and talent training
January 10, 2026
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Next month, the AI Impact Summit, India, 2026, will be held in New Delhi. Organized by the Government of India, one of its goals is “to amplify the voice of the Global South, ensuring that technological advancements and opportunities are shared broadly, not concentrated in a few regions.”
As a build up to the summit, Microsoft, Google, Amazon and other giant American companies have announced more than $68 billion in spending on data centers, cloud computing and other AI-related infrastructure in India, over the next five years.
The investments are primarily expected to enhance WhatsApp, Facebook, YouTube, Netflix, Amazon, and other consumer services in India, offered by the companies, as well as boost usage of OpenAI’s ChatGPT, Google’s Gemini, and Anthropic’s Claude large language models (LLMs). The investments will also expand the capabilities of the global companies in India, which hosts a major part of their worldwide operations, as well as help secure contracts from businesses and government agencies in the country.
Microsoft, for instance, has more than 22,000 employees in Bengaluru, Hyderabad, and other Indian cities. In December, the technology giant said it will invest $17.5 billion in India, by 2029, to advance “cloud and artificial intelligence (AI) infrastructure, skilling and ongoing operations.”
The AI investments in India, by the global companies, may appear to be large. “Big Tech’s $70 Billion AI Move: Silicon Valley Bets On India, Snubs Trump’s ‘America First’ Diktat,” was the headline of a story in The Times of India. “Data Center Surge Reaches India as American Tech Giants Invest Billions,” was the headline of a New York Times story.
But the total investments in India will be tiny: only one percent of the $7 trillion that the companies plan to spend on AI globally by 2030. These global providers of online consumer services and LLMs acknowledge that India is their second largest market, in terms of users. Yet, apparently, the companies are not offering, and, nor is the Government of India requiring them to transfer technology, build local supply chains and achieve employment and talent training goals. Also, are some AI investment announcements being made more to appease Indian officials and gain greater access to the country’s market?
The AI investments are forecast to create four million jobs in India by 2030, according to a government report. However, there are no official estimates on how many jobs will be displaced by AI-based tools and services. They are already causing major job losses in a country facing massive, rising unemployment. In July, for instance, Tata Consultancy Services, an information technology firm and India’s largest private sector employer, reportedly started cutting 12,000 jobs. There are roughly six million employed by IT firms in India, including a quarter of them in customer service and call center work. Almost all the call center jobs and many of the IT jobs in India are at risk of being displaced by AI.
There are no programs and funding to re-skill the displaced employees. In fact, the Indian government has committed just $1.2 billion toward AI development. This spending is far smaller than the billions of dollars in subsidies, including for power and land purchases as well as tax, fee reductions and other incentives, offered by the central and state governments in India.
For instance, Google will reportedly receive subsidies and other incentives from the Andhra Pradesh government totaling more than $2.4 billion, or 15% of its total investment. By 2030, Google plans to spend $15 billion on an AI hub in Visakhapatnam, including a data center “to help meet demand for digital services across India and around the world.” The hub in Andhra will deliver “industry-leading AI infrastructure at scale…enabling businesses to innovate faster,” Thomas Kurian, Chief Executive of Google Cloud said in a statement.
In sharp contrast, in China, as Apple’s experience illustrates, American and other global companies have to team up and transfer technology to local partners, help fund and build domestic supply chains, and provide the latest, advanced training to local talent in technology, manufacturing, operations and all other skills necessary to run the business.
While there are thousands of Indians with math, statistics, physics, engineering, and other skills, necessary for advanced AI-related training, the country has few, if any, advanced AI institutes. So, at the very least, the Government of India should assess a fee, for training local talent, on the global technology companies expanding their AI-based operations in the country.
Even a one percent fee on their spending will raise roughly $1.4 billion a year. This will fund the annual operations of at least fourteen new institutes offering advanced AI and related skills to 14,000 undergraduate students.
The fee will fund the creation of an advanced pool of AI and related talent, catalyze the formation of startups, enable domestic companies to expand into AI-related businesses, attract jobs from foreign companies seeking AI talent, and modernize defense capabilities.
AI centers need massive quantities of power to operate and water for cooling, which are both in very short supply in India. In 2030, will American companies, which partially meet their planned AI investments in India, say it was due to the shortage of power and water?
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