As India’s digital economy evolves into a $500-billion market, providing services to more than 850 million internet users, building digital infrastructure is not the main question anymore. The crucial and most meaningful question now is: who will control the digital ecosystem that the infrastructure enables?
In a world where data, platforms, algorithms and cloud infrastructure determine economic power and national security, digital sovereignty, now more than ever, has become the most crucial factor in India’s digital story.
The debate is ultimately not about technology alone, but also includes determining the acceptable dependencies and any such dependencies that are not tolerable for the state.
The attempt to decouple from foreign digital infrastructure will demand massive investment into national cloud infrastructure, semiconductor capabilities, artificial intelligence technologies and indigenous software capacity sectors where foreign giants currently hold a massive scale and capital advantage.
Dependence beyond this point, however, poses not just economic but also structural risks. Issues of data sovereignty, cyber resilience, supply chain integrity and the ability to manage the flow of information are beginning to equate with national power.
What India must grapple with, then, is not an attempt at full digital autarky, which is unrealistic and uneconomical, but drawing a boundary at the layers of the digital stack that are too essential to cede to external powers.
In an age of heightened geopolitics and the digital as an arm of state power, India’s sovereignty may soon be evaluated not by the infrastructure it builds but by the control it can exercise over the systems that support it.
While ambitious, the official digital dependency policy has shown a significant movement in the Indian political landscape since the early days of the Digital India campaign, particularly its adoption of digital governance as a fundamental aspect of state capacity. The Digital Personal Data Protection Act, 2023, has laid out the groundwork for future data localisation policies while at the same time burdening data fiduciaries.
The act entered the implementation stage in January 2025 with the draft Data Protection Act Rules by the ministry of electronics and information technology, which attracted nearly 7,000 public comments reflecting public engagement and the paradigm shift occurring in data governance. The dichotomy between legislative provisions and their effective enforcement has remained evident with the recent decision to defer SEBI’s data localisation guidelines from its Cybersecurity and Cyber Resilience Framework.
No sector highlights the difficulties of digital sovereignty more than the semiconductor industry. The India Semiconductor Mission 2.0, announced in February 2026, shows ambition by pushing for 2nm and 3nm fabrication technology in future factories. But achieving independence in technology development remains a long-term goal.
These institutional issues interact with economic challenges, with India supplying close to 12 per cent of global AI talent while generating little value in-country. Digital sovereignty is now a reality of strategy and not just technology. India has laid down the building blocks via regulation, public digital infrastructure and new projects in semiconductors and AI.
The real test will come in long-term commitment of investment and policy stability and finding the equilibrium between economic openness and strategic sovereignty in a more fragmented digital world.
Kumar is founder and global president, CyberPeace.
