"It is the largest AI hub that we are investing in anywhere outside of the US," Google Cloud CEO Thomas Kurian said at a ceremony in New Delhi.
Demand for AI tools and solutions is surging among businesses and individuals in India, which is projected to have more than 900 million internet users by year's end.
Kurian announced "capital investment of $15 billion" over the five years and a "gigawatt-scale AI hub in Visakhapatnam", a port city in the southeastern state of Andhra Pradesh.
Google plans for the centre to scale to multiple gigawatts, he added, comparing the project to "a digital backbone connecting different parts of India together".
Globally, data centres are an area of phenomenal growth, fuelled by the need to store massive amounts of digital data, and to train and run energy-intensive AI tools.
Google chief Sundar Pichai said on X that he had spoken to Prime Minister Narendra Modi about the "landmark development".
"This hub combines gigawatt-scale compute capacity, a new international subsea gateway, and large-scale energy infrastructure," he wrote.
"Through it we will bring our industry-leading technology to enterprises and users in India, accelerating AI innovation and driving growth across the country."
- 'Data is the new oil' -
India's Information Technology Minister, Ashwini Vaishnaw, thanked Google for the investment.
"This digital infrastructure will go a long way in meeting the goals of our India AI vision," he said.
Andhra Pradesh Chief Minister Chandrababu Naidu called it a "very happy day". The state's Technology Minister Nara Lokesh said on X that the deal followed "a year of intense discussions and relentless effort".
Lokesh, speaking at the announcement, said that "data is the new oil and data centres are the new refineries".
"This is about India playing an important role on the global landscape," he added.
Recently top American AI firms looking to court users in the world's fifth-largest economy have made a flurry of announcements about expanding into the country.
This month US startup Anthropic said it plans to open an office in India next year, with its chief executive Dario Amodei meeting Prime Minister Modi.
Modi, in a post on X, told Amodei that "India's vibrant tech ecosystem and talented youth are driving AI innovation", adding that he wanted to "harness AI for growth".
OpenAI has said it will open an India office later this year, with its chief Sam Altman noting that ChatGPT usage in the country had grown fourfold over the past year.
AI firm Perplexity also announced a major partnership in July with Indian telecom giant Airtel, offering the company's 360 million customers a free one-year Perplexity Pro subscription.
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