Sovereignty is a fairly straightforward concept, with entities operating in the territory of a nation-State fully subject to its laws, not to any other’s. The advent of a digital society has, however, blurred legal lines and jurisdictions. Businesses have become transnational, not necessitating even a physical presence in a nation-State’s territory. How then would sovereign law apply or be enforced in such cases?
Indeed, since the advent of the digital era, most countries have adopted a piecemeal approach to the
Sovereignty is a fairly straightforward concept, with entities operating in the territory of a nation-State fully subject to its laws, not to any other’s. The advent of a digital society has, however, blurred legal lines and jurisdictions. Businesses have become transnational, not necessitating even a physical presence in a nation-State’s territory. How then would sovereign law apply or be enforced in such cases?
Indeed, since the advent of the digital era, most countries have adopted a piecemeal approach to the legal settlement of digital issues. After all, most digital technologies originated from foreign shores, mostly the US, with other countries aiming maximise their beneficial and transformational applications. As the software coder to the world, India too had considerable stakes in unhindered global technology flows.
Today however ‘digital’ pervades every aspect of national life. We have reached a point where India must clearly define and defend its digital sovereignty. All entities in India, whether physical or digital, need to be subject to Indian sovereignty, i.e. to our laws and rules, and not to any foreign law or diktat.
In late July, 2025, Microsoft suddenly and unilaterally withdrew its services from Nayara Energy, an India-registered company with majority Russian investment, following the imposition of fresh EU sanctions on Russian oil-related businesses. Nayara Energy said: “Microsoft is currently restricting Nayara Energy's access to its own data, proprietary tools, and products--despite these being acquired under fully paid-up licences”.
This is an extraordinary occurrence. When a company gets registered and functions in India, India provides it sovereign cover. But at one go, a foreign company blocked Nayara Energy’s operations--the very anti-thesis of sovereignty.
What was done to Nayara can just as easily be done to an Indian company, and many Indian companies have significant business dealings with Russia.
Microsoft seems to have restored services including email access after Nayara took up this issue in the Delhi High Court. But this is cold comfort: If this had been pursuant to US sanctions, which are getting progressively more arbitrary, Microsoft as a US-headquartered company would not have restored services. After all, Microsoft withdrew its services to the International Criminal Court (IIC), a body established though a global treaty, equally suddenly because the US ordered it to, unhappy over its verdicts on Israel.
Let us consider another scenario: Due to a public health emergency, India issues a compulsory licence to an Indian company for generic manufacture of a costly US drug. Though permitted under international agreements, the US has never been reconciled to this. What if it imposes digital sanctions on the said Indian company? There are innumerable similar possibilities as digital becomes an indispensable infrastructure for practically all businesses and activities. Think of coming to work and realising that your emails and data are inaccessible.
Can India accept being subject to foreign laws and jurisdictions in this sphere, with potential for blackmail and coercion to determine India’s foreign and domestic stances?
China achieved digital independence and sovereignty incrementally through laws and fiat, the only country other than the US to do so. India is a democracy with rule of law, and it urgently needs a digital sovereignty policy (from which various laws can be derived in time). A systematic analysis has thus to be undertaken immediately for its formulation--identifying vulnerabilities and key areas of concern to plug gaps. Silicon chips, domestic data repositories, operating software, cloud computing, key application spaces, and fundamental AI models, are some of the areas that must be included in this exercise. As this can take considerable time, in the interim current practices can be maintained.
Meanwhile, to meet the Nayara Energy kind of contingency, companies like Microsoft can be ordered to provide essential digital infrastructures and services solely though their India-registered subsidiaries. These would have to follow Indian laws and rules, and thus not be subject to coercion under foreign sanctions, otherwise legal action in India, including de-registration of their businesses here, would follow. If any company cannot withstand pressure from the country where they are headquartered, they would be welcome to close operations after fulfilling their contractual and regulatory obligations.
All this, however, also requires developing indigenous digital capabilities. After all, when Microsoft withdrew its services, Nayara turned to a domestic company for digital services. Digital sovereignty thus requires a parallel ‘digital industrialisation’ policy, with robust efforts for the rapid development of a domestic digital industry.
Digital is now a fully mature space, and an essential and all-pervading part of national life. There can be no sovereignty without digital sovereignty. Additionally, in democracies, digital sovereignty has to be understood as the sovereignty of the people in control of their digital future, and not as the State in control of digital systems.
The time for waiting, meandering and reactive responses, is over. A digital sovereignty policy would determine all other stances on digital issues, including in trade agreements, that India is rapidly entering into. It would fortify the country and position it as a formidable player in the 21st century global economy.
This article is authored by Smita Purushottam, former ambassador to Switzerland and Parminder Jeet Singh, digital society researcher, New Delhi.
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