A partnership with the Tata Group would mark the beginning of OpenAI’s Stargate India chapter while accelerating TCS’
ambition of becoming the “world’s largest AI-led services company.” India has the second-largest user base of ChatGPT
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OpenAI, the world’s most-valued artificial intelligence company, is in advanced talks to partner with India’s largest
software services exporter Tata Consultancy Services (TCS) to build AI compute infrastructure in India and co-develop
agentic AI solutions for enterprises, said people in the know. A partnership with the Tata Group would mark the
beginning of OpenAI’s Stargate India chapter while accelerating TCS’ ambition of becoming the “world’s largest AI-led
India has the second-largest user base of ChatGPT after the US.
In September, ET had reported that OpenAI had begun groundwork for the India leg of Stargate, engaging with the
government and holding negotiations with Reliance Industries. However, the two sides failed to agree on terms. Since
then, Reliance has deepened ties with long-time allies Google and Meta to build out Reliance’s 1GW compute hub in
Jamnagar, Gujarat, as well as AI service offerings.
The San Francisco-based OpenAI, valued at $1 trillion, is negotiating a leasing agreement of at least 500 MW of data
centre capacity from TCS’ new data centre arm HyperVault to train and run its AI models locally. The two technology
powerhouses are also keen to build agentic AI solutions for large enterprises across sectors such as BFSI, retail,
consumer goods, manufacturing etc., powered by frontier GPT large language models (LLMs)
Last month, TCS and private equity group TPG announced their decision to cumulatively invest up to Rs 18,000 crore ($2.1
billion) in HyperVault to build gigawatt-scale, AI-ready data centres in a 51:49 alliance. The announcement came after
the Tata flagship company first revealed its plans that entailed a total capex outlay of $6.5-7 billion in investments
to be funded via debt and equity.
OpenAI is set to be the first anchor tenant of the data centres that will also be housing customers such as
hyperscalers, corporate clients, sovereign cloud operators, Tata Group companies and government entities. With
governments insisting on data localisation, OpenAI has enabled local data residency in key Asian countries including
India, Japan, Singapore and South Korea.
The senior leadership team of TCS is said to be in the US to finalise the contours of the partnership and other
commercial details with a target to make a formal announcement by the end of the year.
However, there are no plans for any equity infusion by Open AI in HyperVault at this juncture.
“Tatas are not keen to dilute equity or over index on a single customer like OpenAI and they want to broaden their
offerings to peers like Anthropic. An equity investment from one could potentially raise questions around conflict,”
TCS and OpenAI didn’t respond to queries.
Going beyond artificial intelligence hardware, a partnership with Open AI will be critical as the Indian tech company is
looking to pivot toward becoming a next-generation computing power. The core pillars of this strategy include building
end-to-end solutions, strengthening ecosystem play, upskilling global workforce and reinventing delivery models through
It also coincides with Indian software services companies confronting the challenge of AI, which has disrupted the
traditional, human-led services model, forcing companies like TCS to fire workers. Added to this, are geopolitical
pressures and a slowdown in deal momentum induced by tariff uncertainties.
The planned partnership will mirror the OpenAI for Countries initiative under the broader Stargate umbrella that aims at
building sovereign AI infrastructure in 10 countries through local data centres and customised AI tools, such as ChatGPT
versions for local languages. The first leg, announced in May in the UAE, involved a 1GW cluster in Abu Dhabi developed
with G42, Oracle, Nvidia, Cisco and SoftBank.
Since then, OpenAI has expanded to Europe with Stargate Norway, a 50:50 venture between Nscale and Aker ASA that will
deliver 230MW of compute in its first phase, making it the company’s first European AI Gigafactory. Similar
collaborations in the UK and Argentina have been inked. Pacts in Japan, Estonia, France and Germany are reportedly in
The Stargate project has been billed as the “largest AI infrastructure project in history” and was launched at the White
House in January. In the US alone, the plan is to deploy $500 billion over four years to build 10GW AI infrastructure
with initial investments from SoftBank, Oracle, MGX and OpenAI. Arm, Microsoft, Nvidia, Oracle and OpenAI are the key
technology partners. But investor concerns about the timeline for turning these mega projects into meaningful revenue
sources have sent tremors through the stock market in recent weeks.
India is fast emerging as a key arena in the global AI landscape, with alliances such as OpenAI-Tata and Google-Reliance
vying for dominance. In October, Google and Reliance Industries announced joining forces to deploy AI chips in India,
offering free Google Gemini access to Jio users and co-selling Gemini Enterprise solutions to Indian businesses. The AI
market in India is projected to grow at 25-35% annually to reach $17-22 billion by 2027, dominated by tech services,
startup investments and growing developer population, as per a Nasscom-BCG study.
OpenAI CEO Sam Altman has been stepping up the company’s India presence, setting up its first office in New Delhi,
ramping up local hiring for sales leadership roles and launching aggressive prices for users in India.
ChatGPT Go is OpenAI’s most affordable plan globally and was initially priced at Rs 399 per month. However, rising
competition from Perplexity and Google Gemini that started bundling free subscriptions through telcos forced it to slash
prices. Altman has issued a “code red” to focus OpenAI’s efforts on improving the quality of ChatGPT to fend off
competition while delaying other products such as advertising, AI agents for health and shopping, and a personal
According to a recent Menlo Ventures report, OpenAI’s API market share in the enterprise segment dropped from 50% in
2023 to 25% in July, with Anthropic and Google gaining.
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