Forging India’s Digital Destiny, The Imperative of Sovereignty in the AI Age

Forging India’s Digital Destiny, The Imperative of Sovereignty in the AI Age

The concept of sovereignty, once defined by territorial borders, military might, and political self-determination, is undergoing a profound transformation in the 21st century. Today, a nation’s sovereignty is increasingly measured by its control over the digital realms that underpin its economy, security, and societal fabric. For India, a country with over 78 years of political freedom and nearly 900 million internet users, the question is no longer just about digital access, but about digital self-reliance. The call for “digital sovereignty” has moved from the fringes of policy discourse to the very center of national strategy, a shift powerfully underscored by Prime Minister Narendra Modi’s recent Independence Day address. His declaration that “From operating systems to cybersecurity, it can deep feed on artificial intelligence, everything should be our own,” marks a pivotal moment, signaling a decisive break from a status quo where India, like many nations, largely “works on the world’s platforms.”

This clarion call is not merely about technological swadeshi or isolationist sentiment. It is a strategic recognition that in the digital era, economic dominance, national security, and cultural autonomy are inextricably linked to control over foundational technologies. The journey toward this sovereignty is complex, requiring a nuanced blend of industrial policy, competitive markets, and robust legal frameworks. As argued by experts from the ICRIER Prosus Centre for Internet and Digital Economy (IPCIDE), the goal is not for India to become a mere follower, replicating existing technologies, but a “follow-on innovator,” leveraging its unique strengths to build upon open components and carve out its own niche in the global digital ecosystem.

The Chokepoints of Control: Why Operating Systems and Clouds Matter

Prime Minister Modi’s speech began with a focus on the operating system (OS), a choice that is both symbolic and deeply practical. An OS is far more than mere software; it is the fundamental chokepoint of the modern digital experience. For hundreds of millions of Indians, the six-inch screen of their smartphone is the primary window to the world, and the defaults set by the OS—the pre-installed search engine, the app store, the map service, the browser—profoundly shape their digital behavior. These defaults are not neutral; they are powerful market-shaping tools that can make or break businesses and entrench monopolistic practices.

India’s own antitrust history provides a concrete case study. The Competition Commission of India’s (CCI) landmark ruling in the Google Android case laid bare how defaults, through pre-installation bundles and restrictive licensing agreements, can stifle competition. The CCI order highlighted how these practices create insurmountable barriers to entry, locking users into an ecosystem with such powerful network effects that alternatives become commercially non-viable. When a user buys a new phone with Google Search, Chrome, and the Play Store pre-loaded and set as defaults, the chance of them seeking out and adopting a competing search engine, browser, or app store diminishes drastically. This control over the “first gate”—the handset—allows a handful of corporations to dictate the terms of engagement for an entire economy of app developers, advertisers, and content creators.

But the control does not end at the handset. The “second gate” is the cloud. A stark illustration of its geopolitical significance occurred in July 2024, when Microsoft, to comply with EU sanctions, briefly suspended services to Navarra Energy. While access was eventually restored, the incident served as a global wake-up call. It demonstrated that a foreign corporation, subject to a foreign legal jurisdiction, could unilaterally disrupt the operations of a company in another country. This episode underscores a critical vulnerability: a small number of global “hyperscalers” (like Amazon Web Services, Microsoft Azure, and Google Cloud) control the bottleneck infrastructure of the modern internet. From search and e-commerce to social media and cloud storage, these platforms form the bedrock upon which digital life is built. An entire multi-actor ecosystem—from small-scale sellers and startups to massive enterprises—depends on their survival.

The challenge, therefore, is twofold: it is not only about the market dominance of these platforms but also the data hegemony that sustains it. The vast reservoirs of data generated by Indian users are often processed and stored on servers outside India’s legal jurisdiction, creating economic and security dependencies that can be leveraged for geopolitical pressure. As India marches into the AI age, this data is the new oil, and control over its refinement and use is the new sovereignty.

The Blueprint for Sovereignty: Jurisdiction, Resilience, and Contestability

Building digital sovereignty does not necessitate the quixotic task of rebuilding every layer of the technology stack from scratch. Such an approach would be prohibitively expensive, technologically challenging, and ultimately counterproductive. Instead, the path forward lies in a multi-pronged strategy focused on asserting jurisdiction, building resilience, and fostering contestability.

1. Asserting Jurisdiction and Enforcing Law: The primary role of the state is to create and enforce a legal framework that protects its citizens and its economic interests. This involves updating competition rules for the digital age, as the CCI has begun to do. It also means enacting robust data protection laws that ensure Indian citizens’ data is processed fairly and securely, and that critical data remains within India’s legal purview.

2. Fostering Contestability on the Handset: To break the stranglehold of OS-level defaults, India can implement pro-competition measures that make market entry a reality for innovators. The concept of “choice screens,” which the European Union has pioneered, forces dominant players to present users with a selection of search engines, browsers, and other key services upon device setup. Furthermore, instituting “removable periods” for pre-installed apps would ensure that the home screen truly reflects user choice over time, rather than being permanently dictated by contractual agreements between manufacturers and platform giants. This injects much-needed dynamism into the market.

3. Building Resilient Cloud Infrastructure: For the cloud layer, the strategy should be one of “divvy by design.” This involves a conscious policy to keep sensitive, government, and critical national infrastructure (CNI) workloads on Indian-governed and operated cloud infrastructure. Initiatives like the government’s ‘MeghRaj’ cloud are steps in this direction. However, rather than shunning global hyperscalers entirely, India can strategically use them for advanced services, global scalability, and disaster recovery, creating a hybrid model that balances sovereignty with access to cutting-edge technology.

Research from IPCIDE highlights promising models like Open Cloud Compute, which aims to knit together smaller, domestic cloud providers into interoperable networks. By creating common standards, these smaller players can pool their resources to compete more effectively with hyperscalers, offering a viable, sovereign alternative for certain workloads, including some in the burgeoning AI sector. This decentralizes control and reduces systemic risk.

The New Frontier: Artificial Intelligence and the Sovereign Imperative

Artificial Intelligence is rapidly evolving into an operating layer in its own right. If the foundational layers—the base OS and app stores—are controlled by foreign monopolies, and the computational infrastructure required to train and run advanced AI models rests with a handful of hyperscalers, India risks becoming a mere “feature” on a global platform, rather than an architect of its own digital future.

This concern is deepened by the rise of edge computing, where AI processing moves from centralized cloud data centers to the devices themselves (like smartphones, sensors, and IoT devices). While this promises lower latency and greater efficiency, it also means that the chokepoints of control could become even more deeply embedded in the devices used by Indians every day. If the edge ecosystem is dominated by the same players controlling the OS and cloud, it could further entrench their dominance.

IPCIDE’s study on AI Markets and Competition concludes that to avoid this fate, India needs a trifecta of sovereign capabilities:

• Sovereign Compute: Access to high-performance, non-dependent computing power for training large AI models.

• Access to Datasets: The ability to leverage and process large, anonymized, and ethically sourced datasets for AI training, potentially through digital public infrastructure.

• Interoperability: Ensuring seamless data and application portability between different cloud and edge environments to prevent vendor lock-in and foster a vibrant ecosystem of local AI entrants and innovators.

The Path Forward: Industrial Policy Meets Competition Policy

Skeptics often argue that “building an OS is too hard,” a venture reserved for tech superpowers. However, this narrative is being challenged. Sridhar Vembu, the founder of the Indian software company Zoho, recently declared that his company is capable of competing with Microsoft in “breadth and depth,” pointing to Zoho’s long-term strategy of building an end-to-end software stack with a strong commitment to user experience and privacy. The symbolic adoption of Zoho’s software by India’s IT Minister, Ashwini Vaishnaw, has amplified this conversation, demonstrating political support for homegrown champions.

India is not starting from scratch. It possesses a rich jurisprudence from the CCI and the National Company Law Appellate Tribunal (NCLAT) that understands the nuances of digital markets. More importantly, it has a world-class playbook in Digital Public Infrastructure (DPI). The success of Aadhaar, UPI, and Co-Win has demonstrated India’s unique capacity to build scalable, secure, and inclusive digital public goods. The same principle—of creating open, interoperable protocols that private players can build upon—can be applied to other layers of the stack.

What India needs now is institutional follow-through at the intersection of industrial policy and competition policy. This requires:

• Building Strategic Capacity through Industrial Policy: The state must play a catalytic role in funding large-scale public R&D programs, mission-oriented projects in areas like semiconductors, and creating incentives for private sector investment in deep tech. This is not without execution risk, but it is a necessary gamble for transformative outcomes.

• Enforcing Contestability with Competition Law: India’s competition authorities must be empowered and resourced to proactively monitor digital markets, update merger control guidelines for tech acquisitions, and swiftly address anti-competitive practices like self-preferencing and data leveraging.

• Bridging with Governance Instruments: Data protection law, cybersecurity policy, and technical standard-setting bodies must work in concert with industrial and competition policy to create a coherent and supportive ecosystem for sovereign innovation.

The Geopolitical Reality: Courage in the Face of Retaliation

This ambitious agenda cannot be pursued in a geopolitical vacuum. The dominance of major U.S. tech corporations is not merely an economic fact; it is a potent geopolitical tool. Any nation that attempts to impose digital taxes, stringent data localization norms, or robust antitrust enforcement risks facing swift economic retaliation—often in the form of targeted tariffs, trade pressure, or the withdrawal of investment. The journey to digital sovereignty is therefore a test of national courage and strategic patience.

Conclusion: Sovereignty as a Multiplier of Innovation

The pursuit of digital sovereignty is not an inward-looking, protectionist endeavor. On the contrary, as the authors from IPCIDE astutely note, “Sovereignty multiplies innovation.” By creating a competitive domestic market, fostering homegrown capacity, and ensuring a level playing field, India can escape the trap of being a perpetual technology follower. It can instead emerge as a “follow-on innovator,” building on open-source components and global knowledge to compete in areas where it holds a comparative advantage—such as developing small language models for Indian languages, creating sectoral AI applications for agriculture and healthcare, and leveraging its DPI stack for next-generation public services.

Sovereignty in the 21st century will be defined by borders, yes, but also by bits and algorithms. It is about who controls the code that runs our lives, the data that defines our economies, and the infrastructure that shapes our future. For India, the world’s largest democracy and a rising economic power, the time for decisive action is now. By investing in open and sovereign systems, addressing regulatory gaps with technically skilled regulators, and building strong legal frameworks, India can secure its digital destiny and ensure that its next decades of freedom are truly empowered by technological self-determination.

Q&A on India’s Digital Sovereignty

Q1: What is the core argument made by the authors regarding India’s approach to technological innovation?
A1: The authors argue that India should strive to be a “follow-on innovator” rather than a mere “follower.” This means that instead of just replicating existing foreign technologies, India should build upon open-source components and global knowledge to innovate in areas where it has a comparative advantage. This approach, fueled by digital sovereignty, acts as a multiplier for innovation, allowing India to create tailored solutions for its unique market—such as developing small language models for Indian languages, sector-specific AI applications, and leveraging its successful Digital Public Infrastructure (DPI) model for new domains.

Q2: The article mentions two key “gates” or chokepoints of digital control. What are they, and why are they significant?
A2: The two key chokepoints are:

1. The Handset (The First Gate): This refers to the operating system (OS) on smartphones and the defaults it sets (pre-installed apps, search engines, etc.). As seen in the CCI vs. Google Android case, control over these defaults can stifle competition by creating barriers to entry and locking users into a specific ecosystem, thereby shaping entire adjacent markets.

2. The Cloud (The Second Gate): This refers to the infrastructure provided by global hyperscalers (like AWS, Azure). The incident where Microsoft suspended services to Navarra Energy demonstrated that this control can have geopolitical ramifications, as foreign companies can disrupt services based on their home jurisdiction’s laws. This creates a critical dependency and vulnerability for nations and their businesses.

Q3: What are some specific policy measures suggested to increase “contestability” in digital markets, particularly on mobile devices?
A3: To foster contestability and break the power of defaults, the article suggests:

• Choice Screens: Mandating that upon device setup, users are presented with a clear choice of different search engines, browsers, and other key services, rather than having a single option pre-selected.

• Removable Periods: Allowing users to easily uninstall pre-installed applications that are often part of restrictive bundles. This ensures that over time, the user’s home screen reflects their genuine preferences, not contractual obligations between the device maker and the platform owner.

Q4: How does the rise of Artificial Intelligence (AI) and edge computing complicate the quest for digital sovereignty?
A4: AI and edge computing introduce new layers of complexity:

• AI as an Operating Layer: If the base OS, app stores, and the compute power for AI are all controlled by a few foreign entities, India risks being reduced to a “feature” on a global platform, with limited control over its AI-driven future.

• Edge Computing: This involves processing data closer to the user (on the device itself). While efficient, it means that the control points (algorithms, data processing) become even more deeply embedded in the hardware and software used daily. If the same players dominate the edge, their control over the digital ecosystem becomes even more entrenched and difficult to challenge.

Q5: Beyond building new technology, what broader strategic approach does the article recommend for achieving digital sovereignty?
A5: The article advocates for a comprehensive strategy that goes beyond pure technology development, focusing on the intersection of different policy domains:

• Industrial Policy: The state must actively build strategic capacity through mission-oriented R&D, public investment in critical areas like semiconductors, and support for homegrown champions (as seen with the endorsement of Zoho).

• Competition Policy: This needs a reset to address digital market realities, with updated rules on mergers, data usage, and anti-competitive practices to ensure markets remain contestable.

• Coherent Governance: Bridging these policies with other instruments like data protection law, cybersecurity standards, and technically skilled regulators is essential to create a unified and supportive ecosystem for sovereign innovation. This holistic approach aligns economic sovereignty with the broader national industrial strategy.