In a bold initiative to position itself as a global leader in the artificial intelligence sector, India is set to establish a massive AI “data city” in the state of Andhra Pradesh. This plan is part of a larger digital push aimed at leveraging the growing demand for AI infrastructure and services.

The vision for this data city extends beyond merely building data centers, as Lokesh, a key proponent of the plan, emphasizes a holistic approach. Andhra Pradesh has gained notable traction in attracting foreign direct investment (FDI), accounting for nearly 25 percent of total FDI into India in 2025. The state’s government is not just about passive real estate offerings; they’re actively pursuing tech companies, particularly those involved in server manufacturing and support systems required for robust data center operations.

Lokesh, a Stanford-educated minister who is the son of the state’s Chief Minister, has drawn inspiration from the rapid technological advancements achieved in regions like Silicon Valley and similar global tech hubs. With Prime Minister Narendra Modi slated to host the AI Impact Summit, the timing for such an ambitious initiative couldn’t be better. India’s current position as the third-largest AI power—surpassing nations like South Korea and Japan—highlights the potential this nation holds in the AI landscape.

The announcements come in the wake of significant investments from major corporations. Microsoft recently pledged $17.5 billion, marking its largest single investment in Asia, targeted at nurturing the country’s AI ecosystem. This influx of capital is expected to catalyze the growth of local tech industries and contribute significantly to India’s emerging AI framework.

However, the shift towards becoming a leader in AI is not without its challenges. Critics have raised concerns regarding India’s limited access to high-performance computing resources and the country’s current role as predominantly a consumer rather than a creator of cutting-edge technology. There are also doubts about whether the establishment of data centers will generate meaningful job opportunities. Nonetheless, Lokesh firmly counters these arguments by citing historical precedents, asserting that industrial revolutions tend to generate more jobs than they destruct if embraced properly.

One of the more striking elements of Andhra Pradesh’s growth strategy is the offering of land at a subsidized rate of one US cent per acre for corporations willing to invest in the region. This aggressive incentive underscores the state’s commitment to creating a thriving ecosystem for tech companies. Furthermore, Lokesh believes that the economic benefits from such decisions will outweigh the costs involved, arguing that the state is well-prepared to handle the substantial energy and water intensiveness required for these facilities.

Highlighting India’s ample water resources, Lokesh notes the potential for utilizing surplus monsoon water for cooling purposes, aligning sustainability with technological advancement. His admiration for China’s rapid industrialization and poverty alleviation strategies indicates a roadmap that Andhra Pradesh aims to emulate. The plan includes the establishment of industrial clusters designed to promote synergy among various tech entities operating in close proximity, fostering an innovative culture.

With ambitious plans to generate six gigawatts of capacity through data centers in the near future, and with several projects already underway, Andhra Pradesh is undeniably on a trajectory aimed at implementing these strategies at an unprecedented pace. The central government’s in-principle approval for nuclear power plants underscores the foundational support necessary to ensure that energy standards meet the demands of this burgeoning sector.

In conclusion, the establishment of an AI data city in Andhra Pradesh represents a transformative opportunity for India. By strategically aligning its resources and infrastructure, while attracting substantial investments, India is poised to not only enhance its digital capabilities but also create pathways for economic prosperity through technological innovation.