The company's R&D and support operations in India are second in size and scale only to those at VMware's headquarters in California, US.
In 2013, company headcount in India grew 17 percent to 2,300, while the recent acquisition of AirWatch has added employees in Bangalore.
"India continues to play a crucial role in our global product roadmap and growth strategy. The country's outstanding engineering talent continues to impress us, and we stay committed to investing and growing our team here over the long term," VMWare CEO Pat Gelsinger said in a statement.
The investments earmarked will also enable VMware to further strengthen its leadership position in India's fast maturing virtualisation and cloud computing market, he added.
A VMware-sponsored study showed that server virtualisation will save businesses in India about $3.89 billion by 2020.
This figure reflects the costs normally associated with servers, power, cooling, server administration and real estate.
VMware established a presence in India in 2005, and today serves nearly 3,500 customers and works with about 100 partners.
It has premises across Bangalore, Pune, Ahmedabad, Kolkata, Hyderabad, Chennai, Mumbai and New Delhi.
Globally, VMware reported a record $5.21 billion in revenues for full-year 2013, representing year-on-year growth of 13 percent. It has more than 500,000 customers and 75,000 partners.