New contest is over intelligence, not data

This article is authored by Hriday Sarma, senior fellow, South Asia Democratic Forum, Brussels.

India's announcement this week that it has signed Digital Public Infrastructure (DPI) cooperation agreements with 24 countries expands its digital partnerships with the Global South and other economies. At the same time, China is deepening AI cooperation with developing countries, while governments across Europe, the Gulf and East Asia are investing heavily in sovereign AI infrastructure. These developments signal a shift in the global digital order. The next phase of technological competition is no longer centred on who owns data, but on who controls intelligence, compute infrastructure and technical standards that transform data into economic and strategic power. This is the defining challenge of Digital Sovereignty 2.0.

AI

For the past decade, digital sovereignty revolved around data localisation, privacy laws and cybersecurity. Those remain important, but they no longer define the frontier. A country may keep its citizens' data within its borders yet remain dependent on foreign cloud providers, AI chips, foundation models and software ecosystems. Such dependence limits strategic autonomy as surely as reliance on imported energy or defence technologies.

The real strategic asset today is not data alone, but AI's value chain: Data, compute, semiconductors, algorithms, energy and trusted institutions. Countries that control these layers will increasingly shape economic competitiveness, industrial policy and geopolitical influence.

Sovereign AI has, therefore, become a strategic priority across political systems. Governments are investing in domestic compute capacity, trusted AI models and national AI strategies, not to pursue technological isolation but to reduce dependence on a handful of global technology firms. As AI becomes embedded in public administration, health care, finance and defence, digital capability is becoming critical national infrastructure.

India enters this phase with an advantage few countries possess. Through Aadhaar, UPI, DigiLocker and the broader India Stack, it has shown that digital public infrastructure can operate at population scale while remaining interoperable and inclusive. What began as domestic governance reform is becoming an instrument of international cooperation. The new DPI partnerships, implementation of DigiLocker in Kenya and Cuba, and growing interest in platforms such as e-Sanjeevani and e-Office demonstrate that India's digital architecture is extending beyond its borders.

Yet Digital Sovereignty 2.0 demands capabilities beyond digital public infrastructure.

India's next challenge is to build sovereign strength in Artificial Intelligence (AI) through sustained investment in compute infrastructure, multilingual foundation models, semiconductor capability, trusted datasets, AI safety institutions and technical standards. These are strategic assets that will determine a country's ability to innovate, regulate and compete.

The implications extend beyond India.

Many countries in the Global South face a difficult choice. One AI ecosystem is anchored by American technology leaders such as OpenAI, Microsoft, Google, Amazon and Meta, whose cloud infrastructure, frontier models and AI platforms increasingly underpin the global digital economy. The other is being shaped by China's expanding digital diplomacy, backed by companies such as Huawei, Alibaba Cloud, Tencent, Baidu and DeepSeek, alongside investments in digital infrastructure, AI models and technical standards. For many developing economies, neither pathway guarantees genuine technological autonomy.

India is well placed to help shape an alternative.

Unlike most technology exporters, India has promoted open, interoperable digital public infrastructure rather than proprietary platforms. If that approach evolves into partnerships around affordable AI infrastructure, trusted governance frameworks, open standards and capacity building, India could help countries strengthen their digital capabilities without locking them into competing technological blocs. That would reinforce India's commitment to strategic autonomy while advancing its role as a trusted development partner.

However, Digital Sovereignty 2.0 should not become another slogan.

Building sovereign AI is expensive and resource-intensive. Data centres require enormous investments in energy, water and advanced hardware. No country can own every layer of the technology stack. Nor should sovereignty become a pretext for digital protectionism. The objective is strategic resilience: reducing critical dependencies, diversifying supply chains and retaining the capacity to make independent policy choices while remaining integrated with global innovation.

For India, this calls for treating AI as national infrastructure, not a sunrise sector. Investments in compute, research talent, semiconductor capability, cybersecurity and AI governance deserve the same strategic attention once reserved for highways, ports and power grids.

The next decade will determine not only who builds the most capable AI systems, but whose standards, institutions and governance models shape the digital economy. Countries that fail to develop sovereign digital capability risk becoming permanent consumers of technologies designed elsewhere, with limited influence over their evolution.

India's success with digital public infrastructure has shown that innovation at population scale can emerge from the developing world. Digital Sovereignty 2.0 presents a larger opportunity: To demonstrate that democratic governance, trusted technology and strategic autonomy can coexist in the age of AI. If India succeeds, it will strengthen national interests while offering the Global South a credible framework for digital development that is open, inclusive and strategically independent.

(The views expressed are personal)

This article is authored by Hriday Sarma, senior fellow, South Asia Democratic Forum, Brussels.