Despite whispers of a bubble, OpenAI is planning a gigawatt-scale data center in India

OpenAI is scouting for partners to help it build a huge data center in India, according to Bloomberg. The data center will reportedly be on the gigawatt scale, which would make it one of the largest in the country. This comes at a time of increasing diplomatic tension between the U.S. and India over trade tariffs, but with OpenAI Sam Altman visiting India later this month, those close to the matter believe he may make the announcement official.

OpenAI's immediate future has been repeatedly brought into question over the past month. After the disastrous launch of its next-generation language model, GPT-5, and a recent hiring freeze at Meta's AI division after months of heavy expenditure, many analysts started to question whether the AI bubble was easing closer to bursting. Had the $500 billion+ + rollout of AI infrastructure as part of OpenAI's Stargate plan finally run out of steam?

It seems not, though, as OpenAI will have to invest billions more to build out this newly planned data center. Its Stargate project was mostly seen as a way to quickly scale up American AI data center capacity, but OpenAI has also been pushing an 'OpenAI for Countries' initiative. On the surface, it's to accelerate AI development and adoption in democratic countries that share U.S. values, but it's also a way to entrench American AI developments as the premier solution for countries that might otherwise consider alternative initiatives, such as those developed by China.

As the world's largest democracy with close to 1.5 billion people, India is a prime candidate for such a scheme. OpenAI is said to be currently in talks with Indian officials and local companies in order to secure the land necessary to begin construction. It's also seeking regulatory approval and exploring local energy sources, as a one-gigawatt facility will require a substantial amount of power. Until those are secure, OpenAI won't be able to give too many details about the planned facility, even if and when an announcement is made.

Indian expansion seems all but confirmed, though, even without any kind of announcement. Altman posted on Twitter/X earlier this month that ChatGPT had seen huge growth in India after the adoption of a more affordable $5-a-month subscription model. He also suggested OpenAI was planning further investment in the country.

OpenAI has already inked deals with Norway for a 520-megawatt-scale data center and an unprecedented facility in Abu Dhabi, which could draw as much as five gigawatts when completed. Although those countries have their own particular demands and require bespoke political wrangling, India may prove a little trickier for OpenAI to navigate.

While data center construction may have been planned for some time, the relationship between the U.S. and Indian governments has dissolved in recent weeks. President Trump instigated a 50% trade tariff with India over its continuing purchase of Russian oil products, despite global trade sanctions and efforts among many countries to starve Russian finances due to its aggression in Ukraine.

India has since doubled down, promising to buy more oil and has made major public gestures of friendship with both Russia and China, the latter of which is positioned as a potential rival to the US for dominance in the AI space. India has also been caught skirting Russian sanctions before, with some firms accused of helping to funnel high-end GPUs to the country.

Although these events don't directly interfere with OpenAI's plans, the current US administration has leveraged access to high-tech AI hardware such as Nvidia GPUs as a bludgeoning tool in trade negotiations, cutting off access as a stick, and suggesting the waiving of tariffs as a carrot. If India remains stalwart in its stance on US tariffs, it's possible that the US may respond with further restrictions on trade, which could impact important electronic components like semiconductors and GPUs for AI training and inference, which would be paramount for any future OpenAI data center plans.

Even if OpenAI is able to navigate the murky waters of a U.S/India trade spat, though, it may face competition for AI services once the data center is up and running, and others may even be looking to get ahead of it. Indian billionaire Mukesh Ambani has announced that his Reliance Group is developing what would be the country's largest data center, set to come online with a total capacity of three gigawatts.

This design would dwarf even OpenAI's efforts, and benefits significantly from Ambani's contacts and existing investments in India. The Reliance Group is invested in petrochemical and IT infrastructure projects in India already, though it will reportedly primarily use renewable energy for the new data center project, which is earmarked to come online sometime in 2027, according to Bloomberg.

Regardless of the competition, though, India is OpenAI's second-largest market, with the potential to grow into its largest if ties between the country and company aren't frayed by political tension. It's already secured deals with the Indian federal government to build large and small language models for government use.

Watch this space for the official announcement of the new data center project in the coming weeks.

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