Microsoft has opened its fourth cloud region in India, adding new computing capacity in Hyderabad as companies move more workloads and AI applications onto cloud infrastructure.

The India South Central region became generally available in Hyderabad, Telangana, and joins Microsoft’s existing regions in Pune, Chennai, and Mumbai. Microsoft also operates two data centres in India through its partnership with Reliance Jio.

The Hyderabad region consists of three Availability Zones designed to support business continuity and mission-critical workloads. Microsoft said the three-zone region was designed in line with Indian regulatory and seismic-zone requirements.

Azure Availability Zones are physically separate data-centre locations within a cloud region, with independent power, cooling, and networking infrastructure. Microsoft says the model allows customers to distribute workloads across separate facilities rather than depending on a single data-centre site, supporting high availability and disaster recovery.

Adani Group, HDFC Bank, Bajaj Finance, and PB Pay are among the early customers using or planning to use the new region. The companies have cited requirements including data residency, disaster recovery, additional computing capacity, and support for cloud and AI workloads.

HDFC Bank plans to use Hyderabad alongside Microsoft’s Central India region to strengthen disaster recovery and business continuity. The bank also expects the additional capacity to support AI initiatives and high-performance workloads.

“Having a dedicated DR region perfectly complements our Central India footprint, strengthening our business continuity and cross-cloud resilience,” Atish Bhanushali, HDFC Bank’s head of cloud infrastructure, said. He added that the region’s capacity and compute resources would support the bank’s AI initiatives and high-performance workloads.

The additional region gives financial institutions another option for distributing critical workloads within India. The Reserve Bank of India requires payment-system providers to store payment-system data in India, while separate IT governance rules for regulated entities include requirements covering disaster recovery, business continuity, cloud services, and recovery objectives for critical systems.

The RBI requirements do not amount to a blanket rule requiring all enterprise data to remain in India. Payment-data localisation rules and separate resilience requirements nevertheless affect where some regulated financial workloads can be hosted and how they are backed up.

Bajaj Finance said the region would support its requirements around data residency, resilience, and scalability. PB Pay pointed to locally hosted infrastructure and alignment with India’s regulatory environment as factors behind its use of the region.

Microsoft has also positioned proximity to data and business operations as part of its infrastructure strategy in India.

“That requires trusted infrastructure close to where data lives, teams work and decisions are made,” Microsoft India and South Asia President Puneet Chandok said, referring to the requirements companies face when moving from AI experiments to broader deployments. He described the Hyderabad region as part of Microsoft’s US$20.5 billion cloud and AI investment commitment in India.

Microsoft has not disclosed specific latency improvements for the Hyderabad region. Other cloud providers have cited proximity to users, lower latency, and local data residency when expanding their regional infrastructure in India.

AWS already operates cloud regions in Mumbai and Hyderabad, with its Hyderabad region also built across three Availability Zones. When AWS opened that region, it said customers could use the infrastructure to run workloads and store data in India while serving local users with lower latency.

Google Cloud also operates regions in India and offers India-specific data-location controls through its Assured Workloads service. Its India Data Boundary controls allow supported services, including compute, storage, analytics, and Vertex AI workloads, to be restricted to Indian regions.

The three providers therefore offer enterprises multiple in-country options for regional deployment, disaster recovery, data-location controls, and workloads that benefit from infrastructure closer to Indian users and operations.

Microsoft has committed a combined US$20.5 billion to its India operations through two previously announced investment programmes. The company announced US$3 billion for cloud and AI infrastructure and skills development in January 2025, followed by a US$17.5 billion investment commitment in December 2025.

Microsoft said Azure revenue in India has recorded double-digit growth during each of the past two years. The company has also reported broader adoption of its AI services among large Indian businesses.

More than 90% of NIFTY 100 companies in Microsoft’s analysis use Microsoft 365 Copilot, according to the company. Indian IT services companies including Infosys, Tata Consultancy Services, Wipro, and LTIMindtree have collectively signed up for more than 400,000 Copilot seats.

IDC data provides a separate measure of cloud spending in the country. The research firm valued India’s public-cloud services market at US$10.9 billion in 2024 and forecast it would reach US$30.4 billion by 2029, representing a compound annual growth rate of 22.6%.

IDC identified AI software, managed compute and storage, application modernisation, and platform services among the areas supporting cloud spending. According to a newer IDC forecast cited by Microsoft, India’s public-cloud services spending is expected to reach US$45.7 billion by 2030, growing at 22.2% annually.

Microsoft has previously said the Hyderabad infrastructure is intended to support its cloud and AI customer base in India. In May, the company identified Infosys, Cognizant, and Tata Consultancy Services among businesses using its AI and cloud services in the country.

The Hyderabad opening also follows a series of data-centre and AI infrastructure commitments across India. During the India AI Impact Summit in February 2026, companies including Reliance Industries, Adani Group, Yotta, and Tata Consultancy Services outlined investment programmes covering AI compute and data-centre capacity.

The new region forms part of Microsoft’s wider cloud infrastructure footprint, which spans more than 80 regions across 34 countries. The company operates more than 500 data centres worldwide and maintains terrestrial and subsea networks connecting its cloud facilities.

Government cloud policy adds another consideration for infrastructure providers operating in India. Guidelines issued by the Ministry of Electronics and Information Technology in March 2026 direct central government organisations to classify applications and data by sensitivity and criticality before selecting public, private, or government-backed cloud environments.

The guidelines also address disaster-recovery arrangements for certain workloads, linking deployment choices to the sensitivity and operational requirements of government applications and data.

India has become a focus for cloud infrastructure investment from other hyperscale providers as well. Amazon and Google are also expanding data-centre capacity in the country as they compete for enterprise cloud and AI workloads.

Some projects have faced scrutiny over their environmental impact. Environmental groups have raised concerns about water use and wildlife risks associated with Google’s planned US$15 billion data-centre development in India, while government authorities have rejected allegations that the project was approved without sufficient environmental review.

Microsoft said the Hyderabad facilities use enhanced mechanical cooling with air-cooled chillers designed to consume no water for cooling. The claim applies specifically to cooling rather than the facilities’ total water consumption.

IDC Senior Research Director William Lee, quoted by Microsoft, said proximity, sovereignty, and resilience are becoming baseline requirements as enterprise AI deployments expand.

“With enterprise AI adoption moving from pilots to production at pace, proximity, sovereignty and resilience are no longer differentiators but baseline requirements,” Lee said.

The IDC forecast cited by Microsoft puts India’s public-cloud services spending at US$45.7 billion by 2030, with annual growth of 22.2%. Lee said AI spending in the country is expected to expand at roughly twice the rate of public-cloud spending.

(Photo by Simon Ray)

See also: Microsoft expands Azure AI with Databricks and Mistral

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