Microsoft officially launched its India South Central cloud region in Hyderabad on 6 August 2026, with the company highlighting the facility again at the Microsoft AI Infrastructure Summit on 21 September 2026. This marks Microsoft’s fourth cloud region in India, joining existing facilities in Pune, Chennai and Mumbai. When combined with two Jio-partnered sites, Microsoft now operates the largest hyperscale cloud footprint in the country.
The Hyderabad campus features three Availability Zones specifically built for mission-critical and AI workloads. Each zone operates with independent power, cooling and networking infrastructure, maintaining very low inter-zone latency. Microsoft has compared the physical scale of the overall build to roughly two Eden Gardens stadiums. Early customers utilizing the facility include Adani Group, Bajaj Finserv, HDFC Bank and PB Pay.
The most notable feature of the facility is its cooling system, which Microsoft describes as using high-efficiency mechanical and air-cooled chillers. The company has repeatedly stated the design achieves “effectively zero water for cooling” during normal operation. Company executives emphasize this refers specifically to the cooling infrastructure, not every water use on campus, as kitchens, restrooms and similar facilities still require water.
The cooling system reportedly uses a closed-loop design filled during construction and then recirculated, rather than evaporative cooling that continuously draws fresh water. Alongside the facility, Microsoft is funding local groundwater recharge initiatives, rainwater harvesting projects and watershed work around Hyderabad, including a stated 5 million litres of recharge capacity.
Microsoft has indicated the facility achieves a Power Usage Effectiveness (PUE) of 1.1, meaning only about 10 percent of electricity is used for cooling and other infrastructure beyond computing. This figure represents a company-side efficiency claim using enhanced mechanical cooling with air-cooled chillers. Microsoft generally describes its newer data centres as highly efficient, often around 1.12 PUE.
The Hyderabad region forms part of Microsoft’s $20.5 billion India cloud-and-AI commitment, which includes $3 billion announced in early 2025 and an additional $17.5 billion announced in December 2025. The company has contracted 1 GW of renewable power in India, with 630 MW already flowing. Microsoft positions the site as AI-ready from day one, rather than a conventional cloud facility later upgraded for AI capabilities.
The facility addresses critical infrastructure challenges in Hyderabad and wider India. Traditional hyperscale cooling systems consume significant water, making the air-cooled and closed-loop design particularly relevant in water-stressed regions. If proven effective at scale in hot climates, this approach could enable additional data centre capacity in Hyderabad and similar locations across India.
Microsoft executives have noted that India currently generates a large share of global data but holds a small portion of worldwide data centre capacity. Current Indian capacity stands at approximately 2 GW, with projections for substantial growth by 2035. Microsoft is positioning Hyderabad as a strategic hub not only for Indian demand but also for serving Asia and the Global South, framing it as one of the first large AI-ready nodes in India’s data centre expansion.
