'100 Trillion Won' Pours In and India Answers with Corporate Tax Exemptions... Why Big Tech Is Flocking There

Google, MS, Amazon Announce Large-Scale Long-Term Investment Plans
India to Exempt Data Center Companies from Corporate Tax Until 2047
AI Firms Target 950 Million Users with Ultra-Low-Priced Plans

Image generated by Gemini

Nearly 100 trillion won in global artificial intelligence (AI) investment capital is heading to India. As global big tech companies such as Google, Microsoft (MS), and Amazon unveil large-scale capital injection plans one after another, India is rapidly emerging as a key base in the global AI infrastructure race. With big tech's aggressive investments overlapping with the Indian government's bold incentives, India is expanding its presence beyond that of a simple emerging market to become a next-generation AI hub.

According to major foreign media and the AI industry on the 11th, Amazon recently announced that it will invest 35 billion dollars (about 51 trillion won) in logistics and digital infrastructure in India by 2030 to create 1 million jobs. Previously, Microsoft announced that it would invest 17.5 billion dollars (about 26 trillion won) in building cloud infrastructure and providing technology education, and Google declared late last year that it would spend about 15 billion dollars (about 22 trillion won) to expand AI data centers and cloud infrastructure in southern India. Close to 100 trillion won in capital from these three big tech companies is therefore flowing into India.

The moves by big tech companies in India are not limited to expanding hardware infrastructure. Google plans to establish a large-scale office in Bengaluru, India, that can accommodate about 20,000 people by next year, in order to expand its workforce and research and development (R&D) organization. Microsoft has also announced a plan to provide AI competency training to 20 million people in India by 2030. These moves are being interpreted as efforts to elevate India into a core base for AI development and operations.

The Indian government is responding to this trend with extraordinary incentives. On February 1 (local time), India proposed a plan to exempt foreign companies that provide services using domestic data centers from corporate tax for up to 20 years, actively seeking to attract global firms. Taking into account the characteristics of the AI data center industry, which requires massive amounts of electricity and land, the strategy is to reduce investment risk through long-term tax benefits.

AI companies are also moving quickly to capture India's internet user base. OpenAI has launched an ultra-low-priced subscription product in India at 399 rupees (about 6,430 won) per month to expand its user base, while Google partnered with a local telecom operator to offer the Gemini service free of charge for one year and six months. Their strategy is to secure users first and then pursue monetization over the longer term.

Behind this lies India's overwhelming market scale. According to a survey by the Internet and Mobile Association of India, the country is one of the world's largest online markets, with about 950 million internet users. In addition, its multilingual data and abundant pool of software developer talent are cited as attractive conditions for AI model training and service expansion. From the perspective of global AI companies, it is a market that is hard to ignore.

However, some point out that the road to monetization will not be easy. Kang Bandi, a senior researcher on the India and South Asia team at the Korea Institute for International Economic Policy (KIEP), said, "India has seen a rapid increase in AI activity in a short period of time through government-led projects such as the 'AI Mission,' but in terms of readiness, including the maturity of the industrial ecosystem and society's capacity to accept AI, there is still a gap with leading countries," adding, "In the 'Government AI Readiness Index' released by Oxford Insights, India also appears to have insufficient infrastructure and market maturity compared with its strong policy commitment."

According to a report jointly conducted last year by global accounting firm Ernst & Young (EY) and the Confederation of Indian Industry (CII), surveying 200 Indian companies, more than 95% of respondents allocated less than 20% of their IT budgets to AI, and only 4% of companies exceeded the 20% mark. The share of AI within Indian companies' IT budgets is still low, leading to the assessment that it will take time before enterprise AI revenues can grow in earnest.

This content was produced with the assistance of AI translation services.