Microsoft to Process AI Queries on Indian Data Centres by 2025
Microsoft will enable Indian customers to have their AI queries processed within local data centres starting end of 2025, marking a significant shift in data residency strategy for major tech companies.
Key Takeaways
- Microsoft 365 Copilot AI processing will be available in Indian data centres by end of 2025
- India among 15 countries getting in-country data processing options
- Move addresses regulatory compliance needs for government and financial sectors
- Represents major policy shift from previous resistance to data localisation
Global Rollout and Indian Inclusion
Microsoft confirmed that in-country data processing for Microsoft 365 Copilot interactions will be available in 15 countries worldwide. India, Australia, Japan, and the United Kingdom will receive this capability by year-end 2025.
Policy Shift and Market Evolution
This announcement signals a dramatic reversal from large tech firms’ previous resistance to data localisation mandates like India’s 2018 proposal. Microsoft and competitors have significantly expanded their global data centre footprint since then, with India witnessing substantial investment growth.
As regulated sectors, particularly finance, face requirements to maintain data within Indian borders, data residency has transformed from a compliance burden to a competitive advantage for cloud providers.
Regulatory Compliance Focus
Microsoft emphasized that regulatory requirements drive this initiative, though local processing offers minor latency benefits. The company stated: “This offer is designed to enable customers, particularly those in government and highly regulated industries, to access Microsoft 365 Copilot with an additional option for governance, security, and regulatory compliance.”
Infrastructure Challenges
While Google, Microsoft, and Meta already operate Indian data centres storing customer content, these facilities often lack the power-intensive graphics processing units (GPUs) needed for AI model deployment. Both OpenAI and Google are working to establish GPU-equipped data centres in India to address this gap.
