Telangana 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, as Microsoft opens its India South Central cloud region in Hyderabad.
The new Microsoft region, inaugurated on September 24, is the company’s fourth cloud region in India and is designed to serve customers across India and the wider region. Telangana currently has more than 2.5 GW of data-centre capacity operational or under development, according to the state government.
The expansion comes as Hyderabad sees a shift towards AI-scale infrastructure, with new facilities increasingly being designed around high-density GPU workloads, hyperscale cloud and advanced cooling.
Global and Indian operators including Microsoft, AWS, Iron Mountain, CtrlS, Sify, TCL, NTT DATA and CapitaLand are investing in data-centre infrastructure in the state.
“We are seeing strong investment in hyperscale and AI infrastructure, while global innovation centres and GCCs continue to grow rapidly. This is bringing together the infrastructure, talent, academia and innovation we need to build a truly global technology ecosystem. 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,” Telangana IT Minister D Sridhar Babu said.
The state’s AI roadmap includes initiatives such as AI City, the Global AI Innovation Hub, AIKAM and TGDeX, covering areas from compute and data infrastructure to research, enterprise adoption and commercialisation.
Microsoft’s India South Central region uses a three-zone architecture designed for resilience and future capacity expansion.
Puneet Chandok, President, Microsoft India and South Asia, said Hyderabad’s existing technology ecosystem made it an important location for the company’s AI and cloud expansion.
“India’s AI opportunity will be defined by how quickly organisations can move from intent to action. Hyderabad is uniquely positioned to play a central role in that journey. With world-class talent, a thriving innovation ecosystem and AI-ready cloud infrastructure, the city is becoming an important foundation for the next generation of Frontier Firms across industries.
“As organisations reimagine how they build, operate and grow with AI, Hyderabad will help power that transformation, not only for India but for customers across the region. We are proud to be investing in the capabilities, talent and infrastructure that can help make India an AI-first nation,” he added.
Microsoft said the region will support growing demand for cloud and AI services in India while also serving customers across the wider region.
The new capacity comes as Hyderabad’s data centre market moves towards infrastructure designed for AI workloads rather than conventional enterprise computing.
The state’s more than 2.5 GW pipeline includes projects from both global technology companies and Indian data-centre operators.
The growth is also being supported by Hyderabad’s expanding GCC ecosystem, with more than 500 GCCs cited by the state as part of its broader technology base.
Rajiv Kumar, Managing Director and President, Microsoft India Development Centre, said the company’s presence in Hyderabad has evolved from engineering into cloud and AI infrastructure.
“Our focus extends beyond digital infrastructure. We are committed to creating opportunities for people and communities through skilling, workforce development, entrepreneurship, and sustainability initiatives,” he stated.
Microsoft said its investment will also include local skilling and sustainability programmes.
Its Datacenter Academy, developed with IIIT Hyderabad, Young India Skills University, the Telangana government and Don Bosco Tech Society, runs a 600-hour programme focused on data centre operations and infrastructure management.
Community skilling programmes have trained 556 young people, with 118 securing placements, while a separate Data Analytics programme with Shadnagar Municipality trained 151 students, of whom 108 secured placements.
Microsoft also said the South Central region operates with effectively zero water use for cooling and that it is working with local partners on groundwater recharge, rainwater harvesting and watershed resilience.
By June, its Elikatta groundwater-recharge programme had added around five million litres of recharge capacity.
Microsoft said community programmes around the Hyderabad data-centre region have reached more than 22,400 people through initiatives covering livelihoods, skills, governance and environmental sustainability.
The company is also supporting a Green Skills and Applied AI Centre of Excellence in Hyderabad with the Telangana government, 1M1B and MeitY Startup Hub, including a Green Pharma track focused on AI, green skills and life sciences
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