By Divyanshu Bhushan, Business Unit Head, TO THE NEW

For decades, Big Tech giants have dominated the global cloud landscape, holding the keys to where and how the world’s data is stored. But a paradigm shift is underway. Developing countries, like India, are challenging Big Tech’s decades-long hold on global data by demanding that their data be stored locally.

As India stakes its claim in the global AI race, one critical factor is emerging, Cloud sovereignty. It means having complete control over which records are stored, how they are processed, and how they are governed. In an era where facts are the oil and AI is the engine, the push for cloud sovereignty isn’t just compulsory; it is strategic. For the Indian IT sector, the urgency around the sovereign cloud has never been sharper. Policy only matters if infrastructure keeps up.

Why Cloud Sovereignty Matters to us?

India generates 20% of the world's data, but has less than 2% of global data centers. India's digital economy is expected to reach $1 trillion within the next 5 years, and AI-controlled services will contribute a big part to it. But without a strong, homegrown cloud ridge, we risk building our future on unstable foundations.

Several factors drive India's push towards cloud sovereignty:

Data Privacy Concerns & Regulatory Compliance: With increasing digitalization, safeguarding personal and sensitive data has become paramount. The Digital Personal Data Protection (DPDP) Act, enacted in 2023, mandates stringent controls over data collection, processing, and storage within Indian borders.

National Security: Ensuring that critical data remains within the country's control mitigates risks associated with foreign surveillance and cyber threats. It’ll also help protect the data from various extraterritorial laws.

Economic Growth: By fostering a robust domestic cloud ecosystem, India aims to stimulate innovation, create jobs, and reduce dependency on foreign cloud providers.

The Evolving IT Ecosystem

India’s push for cloud sovereignty is reshaping the IT ecosystem, creating a dynamic landscape for startups, enterprises, hyperscalers, and domestic cloud providers. The implications are both strategic and operational.

Enterprise & Startups:

Hybrid cloud architectures have become the backbone of Indian enterprises, with nearly 99% of organizations adopting hybrid models. This approach allows businesses to balance regulatory compliance with operational flexibility. While startups face a sharper trade-off: scaling fast but within the guardrails of sovereignty. This structure creates both friction and opportunity - firms that can innovate compliance-first will set the pace.

Hyperscalers & Domestic Cloud Providers:

India’s digital independence depends not just on renting global capacity, but on nurturing homegrown cloud champions. Global hyperscalers are doubling down on India with multi-billion-dollar data center bets, but their legal exposure, such as the U.S. CLOUD Act, keeps sovereignty concerns alive. That gap is being filled by domestic players like Sify, Yotta, ESDS, NxtGen, Airtel Nxtra, the government’s NIC cloud, and others, all positioning themselves as sovereignty-first alternatives. The government’s NIC Cloud initiative provides a state-backed backbone for sensitive workloads. This combined expansion underscores India’s growing importance in the cloud sovereignty landscape.

Cybersecurity & Encryption:

Sovereign cloud strategies are inherently tied to cybersecurity. Businesses are increasingly prioritizing India-based encryption and intellectual property safeguards. Sovereign encryption ensures that sensitive data remains under national jurisdiction, giving enterprises confidence while also aligning with government mandates.

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