OpenAI is reportedly planning to build its first data center in India with a capacity of at least 1 gigawatt (GW). This move signifies a major expansion of OpenAI's "Stargate" infrastructure program into Asia. The facility would be one of the largest AI-focused data centers in India.
Strategic Significance
India is OpenAI's second-largest user market and has attracted major cloud infrastructure investments from global technology companies. The proposed 1GW facility would be 10 times larger than typical hyperscale data centers. By establishing a data center in India, OpenAI aims to provide lower latency and more customized services for local users, while also addressing concerns about sensitive data being transferred overseas.
India as a Data Center Hub
India's data center market is experiencing rapid growth, driven by increased digitalization, rising internet penetration, and the government's push towards digital initiatives. The Indian data center industry crossed the 1 GW milestone and is growing at a robust pace. The market is projected to reach $12.85 billion by 2033, exhibiting a CAGR of 10.43% from 2025-2033. This growth is fueled by the increasing demand from cloud service providers, the implementation of the Digital Personal Data Protection Act, and the government's focus on developing domestic AI capabilities.
Details of the Project
OpenAI is reportedly searching for local companies to partner with on the project, requiring the assistance of utilities and construction firms. The exact location and timeline of the project are not yet certain. However, it is speculated that OpenAI CEO Sam Altman may announce the facility during his planned visit to India this month.
The data center is expected to power OpenAI's India-focused AI servers and could be used to host local businesses. It will likely be part of the OpenAI for Countries initiative, aimed at developing AI capacity in multiple countries. This initiative is part of Project Stargate, which focuses on developing AI infrastructure.
Broader Investments in India
Other major tech companies are also investing heavily in India's data center infrastructure. Google announced a $6 billion investment to develop a 1 GW data center in Visakhapatnam, while Microsoft has committed $3 billion for cloud and AI infrastructure over two years. These investments reflect the growing importance of India as a key market for digital infrastructure.
Government Support
The Indian government is providing significant support for the development of the AI ecosystem. The government has allocated $1.2 billion for the IndiaAI Mission to develop domestic AI capabilities. State governments offer incentives such as land value exemptions and stamp duty exemptions for data center development. The government is also working towards building a robust growth ecosystem to ensure healthy development of AI in India and its applications in various components of governance and social development.
OpenAI's Commitment to India
OpenAI has formally registered as a legal entity in India and is preparing to open its first local office in New Delhi later this year. The company has also launched a new ChatGPT plan specifically for Indian users, called ChatGPT Go, which offers more prompts at a lower cost. Additionally, OpenAI intends to distribute approximately half a million ChatGPT licenses to local educators and students. These initiatives demonstrate OpenAI's commitment to expanding its presence and serving the Indian market.
Impact and Future Outlook
The establishment of a 1 GW data center by OpenAI in India would have a significant impact on the country's AI landscape. It would improve AI services for Indian users, reduce concerns about data residency, and support the growth of local AI startups. The move aligns with the Indian government's vision of transforming AI into a digital tool for national development. As India's digital economy continues to grow, the demand for data centers will only intensify, underscoring the importance of building next-generation infrastructure to support this growth.
