Microsoft has officially launched its fourth cloud region in India, expanding its computing capacity in Hyderabad to accommodate the increasing demand for cloud infrastructure and AI applications among businesses. This new “India South Central” region in Hyderabad, Telangana, joins Microsoft’s existing cloud regions in Pune, Chennai, and Mumbai. Additionally, Microsoft operates two data centers in India through its collaboration with Reliance Jio.
The Hyderabad region is structured with three Availability Zones, strategically designed to bolster business continuity and support mission-critical workloads. Microsoft emphasized that the three-zone design aligns with India’s specific regulatory and seismic-zone requirements. Azure Availability Zones are distinct physical data center locations within a cloud region, each equipped with independent power, cooling, and networking infrastructure. This architecture enables customers to distribute workloads across multiple facilities, thereby enhancing high availability and facilitating robust disaster recovery, rather than relying on a single data center site.
Several prominent Indian enterprises, including Adani Group, HDFC Bank, Bajaj Finance, and PB Pay, are among the early adopters either utilizing or planning to leverage the new Hyderabad region. Their motivations include requirements such as data residency, robust disaster recovery capabilities, increased computing capacity, and comprehensive support for cloud and AI workloads.
HDFC Bank, for instance, intends to use the Hyderabad region in conjunction with Microsoft’s Central India region to fortify its disaster recovery strategy and ensure business continuity. The bank also anticipates that the additional capacity will be crucial for its AI initiatives and high-performance workloads. Atish Bhanushali, HDFC Bank’s head of cloud infrastructure, stated that the dedicated disaster recovery region perfectly complements their Central India footprint, strengthening both business continuity and cross-cloud resilience. He further noted that the region’s capacity and compute resources would significantly support the bank’s AI endeavors and high-performance requirements.
This expansion provides financial institutions with an additional option for distributing critical workloads within India. The Reserve Bank of India (RBI) mandates that payment-system providers store payment-system data within India, and separate IT governance rules for regulated entities stipulate requirements for disaster recovery, business continuity, cloud services, and recovery objectives for critical systems. While these RBI requirements do not enforce a blanket rule for all enterprise data to remain in India, the payment-data localization rules and resilience mandates do influence where certain regulated financial workloads can be hosted and how they are backed up. Bajaj Finance confirmed that the new region addresses its needs for data residency, resilience, and scalability, while PB Pay highlighted the locally hosted infrastructure and its alignment with India’s regulatory framework as key factors in their decision to utilize the region.
Microsoft has consistently emphasized the importance of proximity to data and business operations in its infrastructure strategy for India. Puneet Chandok, President of Microsoft India and South Asia, underscored this, stating that the move from AI experiments to broader deployments necessitates trusted infrastructure close to where data resides, teams operate, and decisions are made. He identified the Hyderabad region as a key component of Microsoft’s US$20.5 billion commitment to cloud and AI investments in India.
Although Microsoft has not disclosed specific latency improvements for the Hyderabad region, other cloud providers have historically cited proximity to users, reduced latency, and local data residency as significant advantages when expanding their regional infrastructure in India. Notably, AWS already operates cloud regions in Mumbai and Hyderabad, with its Hyderabad region also built across three Availability Zones. Upon opening its Hyderabad region, AWS stated that customers could use the infrastructure to run workloads and store data within India while serving local users with lower latency. Google Cloud also maintains regions in India and offers India-specific data-location controls through its Assured Workloads service, allowing supported services, including compute, storage, analytics, and Vertex AI workloads, to be restricted to Indian regions. Consequently, enterprises in India now have multiple in-country options from various providers for regional deployment, disaster recovery, data-location controls, and workloads that benefit from infrastructure located closer to Indian users and operations.
Microsoft has made substantial investments in its Indian operations, committing a combined US$20.5 billion through two previously announced programs. This includes US$3 billion for cloud and AI infrastructure and skills development announced in January 2025, followed by a US$17.5 billion investment commitment in December 2025. The company has reported double-digit Azure revenue growth in India over the past two years and widespread adoption of its AI services among large Indian businesses. According to Microsoft’s analysis, over 90% of NIFTY 100 companies utilize Microsoft 365 Copilot, and major Indian IT services firms like Infosys, Tata Consultancy Services, Wipro, and LTIMindtree have collectively procured more than 400,000 Copilot seats.
IDC data further illustrates the burgeoning cloud market in India, valuing the public-cloud services market at US$10.9 billion in 2024 and forecasting its growth to US$30.4 billion by 2029, representing a compound annual growth rate of 22.6%. IDC identifies AI software, managed compute and storage, application modernization, and platform services as key drivers of cloud spending. A more recent IDC forecast, cited by Microsoft, projects India’s public-cloud services spending to reach US$45.7 billion by 2030, with an annual growth rate of 22.2%.
Microsoft previously indicated that the Hyderabad infrastructure is designed to support its cloud and AI customer base in India, naming Infosys, Cognizant, and Tata Consultancy Services among businesses leveraging its AI and cloud services in the country as of May. The opening of the Hyderabad region is part of a broader trend of data center and AI infrastructure commitments across India. During the India AI Impact Summit in February 2026, companies such as Reliance Industries, Adani Group, Yotta, and Tata Consultancy Services outlined significant investment programs for AI compute and data center capacity.
The new region is integrated into Microsoft’s extensive global cloud infrastructure, which spans over 80 regions across 34 countries. The company operates more than 500 data centers worldwide and maintains a vast network of terrestrial and subsea cables connecting its cloud facilities.
Government cloud policy also plays a significant role for infrastructure providers in India. Guidelines issued by the Ministry of Electronics and Information Technology in March 2026 instruct central government organizations to classify applications and data by sensitivity and criticality before choosing between public, private, or government-backed cloud environments. These guidelines also address disaster recovery arrangements for specific workloads, linking deployment choices to the sensitivity and operational requirements of government applications and data.
India has become a focal point for cloud infrastructure investments from other hyperscale providers as well, with Amazon and Google actively expanding their data center capacity in the country to compete for enterprise cloud and AI workloads. However, some of these projects have attracted scrutiny regarding their environmental impact. Environmental groups have voiced concerns about water usage and wildlife risks associated with Google’s planned US$15 billion data center development in India, although government authorities have denied allegations that the project was approved without adequate environmental review. Microsoft, for its part, stated that the Hyderabad facilities employ enhanced mechanical cooling with air-cooled chillers designed to consume no water for cooling. This claim specifically applies to the cooling system, not the facilities’ overall water consumption.
William Lee, Senior Research Director at IDC, highlighted that proximity, sovereignty, and resilience are becoming baseline requirements as enterprise AI deployments accelerate. Lee, quoted by Microsoft, stated that with enterprise AI adoption rapidly moving from pilots to production, these factors are no longer differentiators but fundamental necessities. He further noted that AI spending in India is projected to grow at approximately twice the rate of public-cloud spending.
