/vnd/media/agency_attachments/bGjnvN2ncYDdhj74yP9p.png)
/vnd/media/media_files/2025/12/10/microsoft-announces-usd175-billion-investment-in-india-2025-12-10-19-30-52.jpg)
Microsoft has announced a USD 17.5 billion investment in India over a four-year period, from 2026 to 2029, aimed at expanding the country’s cloud and artificial intelligence (AI) infrastructure, workforce development and ongoing operations.
The company described the commitment as its largest investment in Asia. It builds on the USD 3 billion announced earlier in 2025, which Microsoft expects to fully deploy by the end of 2026.
The announcement followed a meeting between Microsoft’s Chairman and CEO Satya Nadella and Prime Minister Narendra Modi on 9 December, ahead of the company’s India AI tour. According to Microsoft, the discussion centred on India’s AI roadmap and national growth priorities, with the company highlighting that its investment aligns with three themes: scale, skills and sovereignty.
Microsoft expands its sovereign cloud strategy in India
As part of its broader plan, Microsoft has introduced Sovereign Public Cloud and Sovereign Private Cloud for Indian organisations. These offerings are designed to help customers meet data-residency, governance and compliance requirements by providing additional controls over where data is stored, how it is managed and who can access it.
Sovereign Public Cloud is now available from Microsoft’s Indian regions, while Sovereign Private Cloud, powered by Azure Local, will support both connected and disconnected operations from customers’ or partners’ datacentres.
The company said these developments are central to its goal of building secure, “sovereign-ready” hyperscale infrastructure that can support AI workloads within India. Significant upgrades are underway at the India South Central cloud region in Hyderabad, expected to become operational by mid-2026.
Microsoft 365 Copilot will also begin processing data entirely within India by the end of 2025, a shift aimed at strengthening governance and compliance for sectors such as government, banking, financial services and healthcare.
Understanding the sovereign cloud push
A sovereign cloud is a locally deployed cloud environment that ensures all data handling complies with national laws and regulatory requirements. Unlike traditional public cloud models, where data may be distributed across global regions, sovereign clouds keep data strictly within national borders, offering greater assurance for sectors dealing with sensitive information, including government, healthcare and financial services.
The appeal of sovereign cloud solutions is being driven by new data protection legislation, Reserve Bank of India rules and sector-specific mandates that increasingly require sensitive data to remain within the country. These environments also offer enhanced oversight, cyber-resilience and control for organisations seeking to reduce dependence on foreign infrastructure.
India’s sovereign cloud market gains momentum
India’s sovereign cloud market is expanding rapidly. Domestic players including Tata Consultancy Services and Bharti Airtel have already announced sovereign cloud offerings.
Larsen & Toubro (L&T) is preparing to join the field through its data centre arm, which has invested Rs 2,200 crore in facilities totalling 32 MW of capacity, including a 30 MW centre in Kanchipuram, Tamil Nadu. L&T plans to expand its capacity to around 100 MW to meet rising demand for cloud and storage solutions fuelled by global technology companies.
The domestic sovereign cloud market, valued at USD 2.3 billion in 2024, is projected to reach USD 21 billion by 2033, growing at an estimated annual rate of 28 per cent.
Banks, hospitals and major digital platforms, including Aadhaar, are increasingly calling for sensitive data to remain within India’s borders. Tech giants such as Microsoft and Google are also deepening their sovereign cloud commitments in the country.
What is driving the hype?
The surge in sovereign cloud adoption is driven by regulatory, security and operational pressures rather than technological enthusiasm alone. Stricter data-protection rules now require companies to store and process sensitive information locally, particularly in finance, healthcare and telecommunications.
Sovereign cloud environments allow organisations to comply with these mandates while maintaining access to modern cloud infrastructure. As data localisation becomes a standard requirement, more sectors are expected to adopt sovereign cloud models to protect critical information and future-proof their operations.
Ashwini Vaishnaw, Union Minister of Electronics and Information Technology, said the investment comes at a time when AI is reshaping the digital economy. He noted that India aims to advance innovation while prioritising trust and sovereignty.
Additional developments
Microsoft has also outlined a series of initiatives supporting India’s digital public infrastructure and workforce development. The company is integrating advanced AI capabilities into the Ministry of Labour and Employment’s e-Shram and National Career Service platforms. These enhancements include multilingual support, AI-assisted job matching, predictive analytics and personalised guidance for millions of informal workers.
The company is also expanding its AI skilling programme, with the goal of training 20 million people by 2030. Microsoft reports that it has already trained 5.6 million individuals since early 2025 through its ADVANTA(I)GE India initiative.