OpenAI, the world's most-valued artificial intelligence company, is in advanced discussions with Tata Consultancy Services to build large-scale AI compute infrastructure in India and jointly develop agentic AI solutions for enterprises, according to people familiar with the talks, the Economic Times reported. The partnership would launch OpenAI's Stargate India initiative and support TCS's push to become the "world’s largest AI-led services company.”
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As per the report by The Economic Times, India is already OpenAI's second-largest user base after the US. Earlier negotiations with Reliance Industries did not go further, and OpenAI shifted its focus to Tata for the India chapter of its global expansion strategy.
Is HyperVault set to be OpenAI's India powerhouse?
OpenAI is in negotiations to lease a minimum of 500 MW of data centre capacity from HyperVault: TCS’ new data centre arm to train and operate its AI models locally. HyperVault recently received investment commitments of up to Rs 18,000 crore ($2.1 billion) from TCS and TPG to build gigawatt-scale, AI-ready data centres as part of a large capex plan.
According to the report by the Economic Times, subject to finalisation, OpenAI will become HyperVault's first anchor tenant in addition to hyperscalers, Tata Group businesses, government clients and sovereign cloud operators. This deployment aligns with growing global demand for data localisation, as already rolled out for OpenAI to offer local data residency in India, Japan, Singapore and South Korea.
A high-stakes strategic shift for TCS
The partnership is an important pivot for TCS as the IT services market in India adjusts to disruptions from AI-driven automation and slower global tech spending, the report further states. The company is steering toward next-generation computing in efforts to further build end-to-end AI solutions, ecosystem partnerships, and modernise delivery models with AI agents.
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India: the new battleground for AI giants
The report further states that the talks between OpenAI and Tata are taking place at a time when the AI ecosystem is seeing heightened competition in India. In the recent past, Google and Reliance joined hands to deploy AI chips and launched Gemini-based enterprise solutions. Driven by tech services, startups, and a rapidly expanding pool of developers, the domestic market is seen growing 25-35% annually to reach $17-22 billion by 2027. OpenAI CEO Sam Altman has accelerated India-focused efforts, setting up a New Delhi office and rolling out lower-priced plans to stay competitive. A formal announcement of the Tata partnership is expected by the end of the year, though there are currently no plans for OpenAI to take equity in HyperVault.
