BENGALURU, India: Google will invest US$15 billion over five years to build an artificial intelligence (AI) data center in India’s southern state of Andhra Pradesh, marking its largest-ever investment in the country as the tech giant bets on India’s role in the global AI race.

The new data center, located in the port city of Visakhapatnam, will serve as Google’s “largest AI hub outside the United States,” Google Cloud CEO Thomas Kurian said at an event in New Delhi attended by India’s information technology and finance ministers.

“This long-term vision we have is to accelerate India’s own AI mission,” Kurian said.

The announcement comes amid a diplomatic rift between Washington and New Delhi over tariffs and a stalled trade agreement, as Prime Minister Narendra Modi has asked Indians to buy indigenously made goods. Despite the tensions, Google’s move underscores the growing strategic importance of India’s massive internet economy to U.S. tech giants.

The company said the investment “creates substantial economic and societal opportunities for both India and the United States ” without directly addressing the trade dispute.

Google’s plan is part of a broader effort by global technology companies to expand data center capacity and meet soaring demand for AI services. Parent company Alphabet has pledged to spend around $85 billion this year globally to expand its infrastructure footprint as competition heats up with Microsoft, Amazon, and others.

The Andhra Pradesh campus will start with a 1-gigawatt capacity, Google said. State officials had earlier estimated the project’s cost at $10 billion and said it would create around 188,000 jobs.

U.S. firms operating in India have faced growing boycott calls in recent months, with Modi supporters and business groups criticizing the 50 percent U.S. tariff on Indian goods. Still, Indian officials have privately reassured executives that the government remains committed to maintaining a business-friendly environment, two sources told Reuters.

Despite these headwinds, U.S. companies are doubling down. Microsoft and Amazon have already invested billions in Indian data centers, viewing the country’s nearly one billion internet users as a critical growth market.

Indian conglomerates Adani Group and Reliance Industries, led by billionaires Gautam Adani and Mukesh Ambani, have also launched major data-center initiatives. For Google’s new project, the company will partner with Adani Group and telecom carrier Airtel to build supporting infrastructure, including an international subsea gateway.

AI computing requires vast power and space to connect thousands of chips into clusters, a need that has sparked a global race to construct specialized data centers.

Google’s expansion further solidifies India’s role as a key hub for digital infrastructure, even as the company faces antitrust scrutiny and legal challenges in the country. Alphabet counts India as one of its fastest-growing markets, home to the world’s largest YouTube audience and hundreds of millions of Android users.