Cloud sovereignty vs. Cloud innovation: Why India doesn’t have to choose

As we witness the rise of AI, the need for sovereignty is no longer optional. For organizations deploying larger models with access to sensitive data, it is a requirement. Research has shown concerns around sovereignty ‘hindering innovation’ and having ‘knock-on consequences for innovation’. We don’t see it that way. Sovereignty isn’t a trade-off for innovation; in fact, for India to scale securely, the two must work in tandem.

At a global scale, BCG found that 65% of countries will have a digital sovereignty plan by 2028. This coincides with the introduction of legislations such as the Digital Personal Data Protection (DPDP) Act in India, which was put in place in 2023 to govern digital personal data. Since then, 50% of Indian enterprises have prioritized platforms with built-in data privacy and AI governance controls, a clear shift in how organizations manage their data.

“Any organization that doesn’t operate exclusively in the Indian jurisdiction, or doesn’t adhere to let’s say Indian norms and laws, or primarily needs to rely on another jurisdiction, and then the Indian organization's subsidiary, these are the things we can’t get away with.” - Rahul Poruri, CEO of Foss United Foundation (source: Digital sovereignty panel - Civo Navigate India 2025)

Alongside the growing emphasis on sovereignty, research indicates that cloud computing continues to be a key enabler of innovation by reducing IT cost and complexity. To understand how these concepts collide and reshape India’s digital landscape, we first need to define what we mean by sovereignty and innovation in a modern context.

Why has sovereignty become a priority in India?

India’s push toward cloud sovereignty isn’t just about red tape; it’s a strategic move to maintain control over its critical digital assets.

National data protection frameworks such as the DPDP Act have elevated data sovereignty from an afterthought to a structural requirement embedded in enterprise IT decisions. Effective data governance, including data residency and sovereignty controls, is foundational to how modern cloud systems are architected and operated, especially under India’s evolving legislative landscape.

As AI workloads grow more data-intensive, the pressure is on to ensure that sensitive data, including customer information and proprietary models, remains within clearly defined jurisdictional boundaries. Legal and regulatory frameworks are now the primary drivers of cloud strategy. Global research emphasizes that where your data lives legally affects everything from governance, compliance, and risk management. The DPDP Act and related sectoral guidelines now require organizations in regulated industries (such as finance, healthcare, and defence) to demonstrate compliance proactively, elevating sovereign cloud capabilities from optional to operationally essential.

Beyond regulation, there is a broader economic reality at play. India generates and consumes a staggering volume of digital data, and local control over that data carries both economic and competitive significance. Research on sovereign cloud strategies affirms that retaining data and cloud infrastructure within national borders enables tighter integration with local innovation ecosystems and supports strategic autonomy in key sectors.

“Look at the amount of data we are generating on a daily basis… India is one of the largest consumers of anything in the world. All top companies across the globe are here and trying to get insights into whatever we are consuming. We have the biggest market in the world, and that becomes a very critical economic aspect when it comes to consumption… When it comes to actually using those services and what we are using, such as SaaS products, they are hosted somewhere else. So, all that revenue we are actually spending is going outside of India.” - Toshal Khawale, Managing Director at PwC (source: Digital sovereignty panel - Civo Navigate India 2025)

What is the link between innovation and sovereignty?

The assumption that sovereignty slows innovation is outdated. In reality, sovereignty doesn’t constrain experimentation; it reinforces it by reducing risk and building trust.

Research on data governance and cloud computing finds that innovation accelerates when organizations have clarity on legal compliance, security boundaries, and data governance. These elements reduce uncertainty and enable more decisive investment in new technologies.

Innovation depends on trust. When enterprises are confident that their data and intellectual property are secure, compliant, and under local jurisdiction, they lower barriers to adopting high-impact cloud capabilities like AI/ML and real-time analytics. This aligns with broader literature showing that robust data governance and secure cloud infrastructure are preconditions for ambitious digital transformation initiatives.

Sovereignty provides that confidence by reinforcing data control, privacy protection, and operational governance within a nation’s legal framework, which in turn encourages bolder experimentation and rapid scaling.

The real question for Indian enterprises and policymakers is not whether sovereign cloud can support innovation, but whether innovation can thrive without it, given the current legal, economic, and technological context. In practice, sovereign cloud strategies that emphasize local governance, secure architectures, and enterprise-grade capability are increasingly seen as essential enablers of sustainable innovation, not constraints on it.

The importance of sovereign cloud providers

Over the years, two sovereignty models have emerged. The first adapts hyperscaler technology to sovereign requirements. The second builds sovereignty from the ground up, often through domestic or regionally anchored providers. Both aim to solve the same problem, but with very different trade-offs.

Hyperscaler-led approaches offer familiarity and scale, but sovereignty is often a bolt-on constrained by external jurisdiction, licensing complexity, or opaque governance models. Control exists… but only to a point. Even if your data is stored locally, if your provider is governed by foreign law, true sovereignty remains out of reach.

Sovereign-first platforms take a different path. They prioritize local control, predictable pricing, and jurisdictional clarity, while still delivering modern cloud capabilities. In India, this model is gaining momentum as enterprises seek platforms that align with national regulation and local innovation goals.

This is where cloud parity becomes critical. Sovereign cloud should not mean fewer features, slower innovation, or second-class tooling. It should offer the same APIs, services, and operational experience across environments: private, public, and hybrid.

At Civo, we believe parity is what allows organizations to move fast without giving up control. It removes the public vs. private split, giving you one way of working across your entire stack.

Where hyperscalers offer compromised sovereignty in certain regions, bound by U.S. law, Civo’s sovereign cloud delivers protection from foreign jurisdiction through local ownership and operation. This isn’t just infrastructure, it’s autonomy engineered into every layer. When data sovereignty is non-negotiable, only Civo guarantees your cloud operates under local law.

“Businesses are waking up to the fact that without clear, reliable control over where their data resides—and who has access to it—they’re exposing themselves to unnecessary risk. The cloud needs to evolve to meet this new reality, and that means prioritising transparency, localised control, and trust at the very core of infrastructure.” - Mark Boost, CEO of Civo

Summary

Cloud sovereignty and cloud innovation are not mutually exclusive. In fact, they are strongest when designed together.

For India, the path forward is clear: platforms that deliver sovereignty by default, innovation by design, and parity across environments. This gives organizations the freedom of public cloud, the control of private infrastructure, and the confidence to build what’s next.