India’s central government is considering a mandate that would require companies in critical sectors — including energy, telecommunications, and financial services — to run their core digital infrastructure exclusively on domestically built sovereign cloud systems, according to a report by The Indian Express citing government officials, published in April 2026.
The move is aimed at reducing India’s dependence on foreign cloud providers and giving the government tighter control over sensitive data and digital infrastructure.
The proposal gained urgency following an incident in July 2025, when Microsoft temporarily blocked cloud services — including Outlook and Teams — for oil refiner Nayara Energy after the European Union imposed sanctions linked to its Russian shareholder, Rosneft. Microsoft’s automated compliance system cut off Nayara’s employees from core business tools and data despite valid, paid-up licences, without prior notice. Nayara moved the Delhi High Court seeking immediate restoration of services, and following legal action and government intervention, Microsoft restored access. The company later told the Centre the outage was caused by a “legacy” automated sanctions compliance system that had “presumed” a jurisdictional nexus with the EU due to the historically global nature of its operations.
“The Nayara block was a wake-up call. A major concern was that a foreign company could cut off access to one of our companies’ core digital infrastructure and bring its operations to a standstill. We do not like that level of dependency on a foreign company,” a senior government official was quoted as saying.
The same official acknowledged that India’s domestic cloud infrastructure is not yet strong enough to rival US-based providers, noting that a stronger push is needed to build competitive sovereign cloud systems within the country.
The sovereign cloud consideration is part of a broader pattern of policy action. The government has also implemented a de facto ban on major Chinese CCTV brands Hikvision and Dahua by making STQC certification mandatory for surveillance equipment, effectively blocking devices containing Chinese-origin chipsets or firmware over concerns about backdoor access and data leakage.
If enacted, a sovereign cloud mandate could significantly reshape how critical Indian industries manage their digital operations, though the government’s own acknowledgment of gaps in domestic cloud capacity suggests implementation may face practical challenges.
Source: Inc42 Media