OpenAI, the developer of the popular generative AI model ChatGPT, is exploring ways to localize the data of its Indian users. Sources indicate that the company is likely to rely on its primary investor, Microsoft, for this purpose.
One key strategy OpenAI is considering involves leveraging Microsoft Azure data centers located within India. As part of its cloud services, Microsoft operates data centers in the country, facilitating the hosting of AI models, applications, and data storage domestically. An industry executive noted that while partnerships with domestic data center providers remain an option, discussions are underway to utilize Microsoft’s local data centers. This approach would simplify OpenAI’s compliance with Indian data sovereignty regulations and offer faster processing by reducing latency for data generated in India.
For OpenAI, India constitutes the second-largest market, with its user base tripling over the past year. The company’s plans to locally store ChatGPT user data on Indian servers are particularly significant, aligning with the requirements of the Digital Personal Data Protection (DPDP) Act. OpenAI chief Sam Altman emphasized India’s importance for AI during a recent visit, stating, “India is an incredibly important market for AI in general and OpenAI in particular.”
Microsoft is also making substantial investments in India to support cloud and AI infrastructure. Last month, Microsoft chairman and CEO Satya Nadella announced a $3 billion investment in India over the next two years, focusing on cloud, AI infrastructure, and upskilling initiatives. This encompasses the establishment of new data centers in the country. Microsoft already manages three data center regions in India and plans to launch a fourth in 2026. The company’s investment aims to cultivate a scalable AI computing ecosystem to meet the growing demands of India’s rapidly expanding AI start-ups and research community.
Another industry executive pointed out that, as a Microsoft partner, OpenAI can readily address its data localization needs if Microsoft expands its Azure Cloud services in India and increases its data center capacity. Microsoft is reportedly also in discussions about using co-located data centers in India, which would involve leasing space within existing data centers instead of constructing its own. In this scenario, Microsoft would share the infrastructure of local data center solution providers such as Yotta, CtrlS, and Sify, while retaining control over its servers, networking hardware, and other critical systems.
