OpenAI in Negotiations to Establish Data Centre in India

Nitin Konde, Varun Bhardwaj

15 Feb 2025 — 3 min read

OpenAI in Talks to Set Up Data Centre in India

According to a media outlet, OpenAI, the company behind ChatGPT, has started the process of establishing data centre operations in India. Data from users in India and a few of its smaller bordering nations is probably stored at the hub. According to sources cited in the story, OpenAI is now speaking with a few data centre operators, although these are only the very beginning stages of their strategy.

They could need some time to go over specifics like the venue and capacity. According to the report, the AI behemoth is eager to finish the procedure by 2025 but has not established a deadline. The majority of OpenAI's servers are housed in data centres in the US state of Texas. The creator of the well-known chatbot serves consumers worldwide, including those in India, by utilising Microsoft's Azure Cloud services.

India Second Biggest Market for OpenAI

CEO Sam Altman stated during his recent trip to India that the country is OpenAI's second-largest market, with a threefold increase in users in the last 12 months. "I observe that folks in India are utilising AI in various aspects of the stack, including chips, models, and other amazing applications. Therefore, I believe that India ought to take the lead. During a fireside talk with IT minister Ashwini Vaishnaw on February 5, Altman stated, "I believe India should be among the leaders of the AI revolution."

"That's a reference to a comment I made here a few years ago about cost," Altman said, attempting to elucidate a statement that caused controversy on his previous visit to India. That might have been taken out of context. At that particular moment, there was a scaling issue, and I still believe it is costly to remain on the cutting edge of pre-trained models," he said.

He was questioned if a small team could produce a substantial AI model on a $10 million budget while he was in India in 2023. "It's totally hopeless to compete with us on training foundation models," he'd stated. It was long before the low-cost AI helper from Chinese company DeepSeek rocked the IT industry.

Tug of War Between Open AI and Chinese DeepSeek

Sam Altman's tour takes place at a time when OpenAI is facing significant challenges due to the emergence of DeepSeek, a Chinese AI search engine platform that claims to have developed AI models that can compete with the best models from US firms like OpenAI, Meta, and Google at a far lower cost. India has one of the biggest populations and developer pools in the world.

OpenAI will be able to increase its earnings by establishing a physical base in the nation. The trip coincides with a wave of copyright infringement cases against the AI giant for allegedly exploiting local digital platforms' and book publishers' content to train its chatbot ChatGPT without permission.

Meanwhile, OpenAI has apparently started talking about data localisations in an effort to ward off any additional regulatory obstacles. The corporation wants to store its Indian consumers' data in the nation itself as part of this. Since India is one of the company's largest developer ecosystems, OpenAI is naturally seeking methods to increase its presence there.

In preparation for the Digital Personal Data Protection Act of 2023, it has already started talking about ways to localise the data of its Indian citizens in domestic data centres. A person with knowledge of the development told Livemint that the drive to localise data operations is probably going to start soon.