Microsoft opens data centre in Telangana amid AI infra expansion push

Microsoft's India South Central data centre region is now live in Telangana, as the state targets 5 GW of capacity and around $30 billion in AI and digital infrastructure investment by 2029

Microsoft on Thursday launched a new data centre region in Hyderabad, Telangana, strengthening the tech giant’s artificial intelligence (AI) and Cloud infrastructure in the country while positioning the state as a key hub for regional data processing.

 

The company’s “India South Central” facility comes as Telangana’s AI infrastructure ecosystem scales up, with 300 megawatt of data centre capacity already operational and 2 gigawatt (GW) under development across major global and Indian operators. The state is targeting 5 GW of data centre capacity by 2029, with around $30 billion in potential investment across the broader AI and digital infrastructure ecosystem, the government said.

 

 

The expansion reflects a fundamental shift in how data centres are built. Rather than traditional server storage, new facilities are engineered specifically for AI — featuring high-density graphics chips, processing scale, and advanced liquid cooling. A growing list of global companies, including Microsoft, AWS, Iron Mountain, CtrlS, and NTT DATA, are investing in these AI-ready complexes.

 

“We are building on this foundation with an ambition for Telangana to reach 5 GW of data centre capacity by 2029 and attract around $30 billion in investment. Microsoft’s investment is an important part of this journey and will further strengthen Hyderabad’s ability to power the next generation of AI, Cloud and digital innovation for India and the world," said D Sridhar Babu, minister for information technology, electronics and communications, Telangana.

 

The state’s AI expansion is being driven by a rapid influx of global capability centres, with Hyderabad now hosting more than 500 such facilities. Telangana government officials attribute the growth to a state AI roadmap focused on expanding technology infrastructure, tapping local university talent, and seeking deep-tech investment.

 

The investment is aligned with Telangana’s Hyderabad Global AI Strategy, which brings together AI City, the Global AI Innovation Hub, AIKAM and TGDeX to support the development and adoption of AI at scale. The strategy aims to build Hyderabad’s capabilities across the AI value chain, from compute and data infrastructure to research, enterprise deployment and commercialisation.

 

“Hyderabad has been an important part of Microsoft's journey in India for over two decades. From engineering innovation to cloud infrastructure and AI, the city has demonstrated the talent, ambition, and ecosystem that will shape the future of technology,” said Rajiv Kumar, managing director and president, Microsoft India Development Centre.

 

The expansion deepens Microsoft’s 25-year history in Hyderabad, where it already operates major engineering and research facilities. On the environmental front, the company said the new data centre will use zero-water cooling technology, relying instead on closed-loop systems. Microsoft is also funding local groundwater recharge and rainwater harvesting projects in surrounding areas.