OpenAI in talks with TCS to develop AI infrastructure in India: Report

OpenAI is reportedly engaged in advanced talks with Tata Consultancy Services (TCS) to collaborate on building AI compute infrastructure in India and co-develop agentic AI solutions for enterprises.

According to a report in The Economic Times, the proposed partnership would mark the launch of OpenAI’s Stargate India chapter and is expected to accelerate TCS’s ambition of becoming the “world’s largest AI-led services company. India has the second-largest user base of ChatGPT after the US.

In September, OpenAI initiated groundwork for its Stargate project in India, holding discussions with the government and leading technology firms. Initial negotiations between OpenAI and Reliance Industries did not result in an agreement, and attention has now shifted to Tata Group for partnership opportunities, the report added.

A central focus of the partnership is the development of agentic AI solutions powered by frontier GPT large language models, targeting enterprise clients in sectors such as banking, financial services and insurance (BFSI), retail, consumer goods, and manufacturing.

Last month, TCS and private equity group TPG announced a joint investment of up to ₹18,000 crore ($2.1 billion) in HyperVault to develop gigawatt-scale, AI-ready data centres, forming a 51:49 alliance. OpenAI is set to be the first anchor tenant of these data centres, which will also serve hyperscalers, corporate clients, sovereign cloud operators, Tata Group companies, and government entities, the report stated.

With increasing regulatory demands for data localisation, OpenAI has enabled local data residency in key Asian markets, including India, Japan, Singapore, and South Korea. This step is seen as an essential part of the planned collaboration with TCS, aligning technological development with regulatory requirements.

The senior leadership team of TCS is currently in the US to finalise terms of the potential partnership, aiming to make a formal announcement by the end of the year, as per the report. There are no plans for any equity infusion by OpenAI in HyperVault at this stage.

The partnership aims to leverage TCS’s strategic shift towards next-generation computing, focusing on end-to-end solutions, ecosystem strengthening, workforce upskilling, and reinventing delivery models through AI agents. This move comes as Indian software service companies face challenges from AI advancements, changes in delivery models, geopolitical pressures, and deal momentum slowdowns due to tariff uncertainties.