"We will grow our local operations, boost venture-capital investments and work closely with the government, industry and educators to increase the impact of the country's information and communications technology industry," Barrett said.
Of the total, approximately $800 million is earmarked for expanding research and development at Intel's research and development center in Bangalore.
The Bangalore facility was opened in 1999 and has grown into the largest non-manufacturing Intel site outside the United States. More than 1,300 workers at the facility focus on chip design, communications software, digital signal processing and other technologies.
In addition, the company's venture capital arm has established a $250 million venture capital fund to focus on Indian IT firms. Intel Capital will back companies that will help nurture important technologies and products developed for local use.
It will also invest in outsourcing service companies that target overseas market segments. Initial focus areas include mobile communications, broadband applications and wireless technologies.
"The pace of technology innovation is accelerating," Barrett said. "Through the Intel Capital India Technology Fund, Intel will help Indian companies drive technology adoption locally and identify new business opportunities globally."
Intel Capital made its first investment India in 1998 and has backed 40 Indian companies. Several have gone public or have been acquired, such as Deccanet Designs, a communications design and software services company, and FutureSoft, a telecom product and services company.