Why Silicon Valley’s biggest companies are investing billions in India

Amazon (AMZN) pledged $1 billion in January, Facebook (FB) invested nearly $6 billion in late April and Google (GOOGL) topped them all last week with a $10 billion commitment. They’re part of a wave of investment into India’s tech industry this year that’s now well over $20 billion, with most of it coming from the United States.

The magnitude and sources of those investments would have seemed highly unlikely, if not outright unthinkable, just months ago when all those technology companies were on a collision course with Indian regulators and tech CEOs were getting the cold shoulder on visits to New Delhi.

A lot has changed since then. The coronavirus has ripped through the global economy, hitting India particularly hard. India’s diplomatic spat with China has spilled over into tech, aligning it with the Trump administration’s own distrust of Chinese companies. And while India has always been a big draw for US tech firms, the diminishing scope for tech cooperation with China and new threats to their foothold in places such as Hong Kong are giving new importance to the Indian market.

But the flood of investment also highlights something that has now been true for years: India’s digital economy, with more than 700 million internet users and roughly half a billion yet to come online, is simply too big a prize for Big Tech to ignore for long.

“People have confidence that, long term, India is going to be a good market, that long term, its regulations are going to be fair and transparent enough,” said Jay Gullish, who heads tech policy at the advocacy group US-India Business Council. “I think these are just … deepening roots that already exist.”

The China factor

“It is harder and harder to do business with China,” said Mark Lemley, director of Stanford University’s program in law, science and technology. “There is also a growing sense that doing business with China involves troubling moral compromises.”