According to officials cited in a report, the proposal has gained urgency following last year’s disruption involving oil refiner Nayara Energy, when Microsoft temporarily blocked services to the company. The incident triggered alarm within policy circles over the vulnerability of Indian firms dependent on overseas digital infrastructure.
“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 operations to a standstill,” a senior official stated. The official added that discussions are underway to ensure that entities in critical sectors host their digital infrastructure exclusively on sovereign cloud platforms.
Cloud systems provide remote access to essential computing resources, including servers, storage, databases, and software, enabling businesses to scale operations efficiently while reducing infrastructure costs. However, any suspension of services by providers can lock companies out of their own data and communication tools, creating severe operational risks, particularly in strategic sectors.
Officials acknowledged a significant challenge in implementing the proposal, noting the current limitations of domestic cloud capabilities. “We do not yet have sufficiently advanced domestic cloud systems that can compete with those from the United States,” an official said.
The report also recalled that the European Union imposed sanctions on Nayara Energy in July 2025 due to the 49.13 percent stake held by Russian oil major Rosneft. Shortly after, Microsoft suspended technical support to Nayara, disrupting employee access to critical platforms such as Outlook and Teams. The company subsequently approached the Delhi High Court, after which services were restored.
The Ministry of Electronics and Information Technology had earlier sought an explanation from Microsoft regarding the disruption. In its response, the company attributed the outage to an automated “legacy” sanctions compliance system. Microsoft clarified that the enforcement mechanism defaulted to broader global restrictions, leading to unintended service suspension.
The company further stated that it has since revised its compliance framework, introducing a system that requires senior leadership review before any service suspension is implemented against an entity.
The ongoing deliberations signal a strategic shift in India’s digital policy framework, reflecting growing concerns over technological sovereignty and the need to secure critical infrastructure against external dependencies in an increasingly volatile global environment.
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