Larsen & Toubro Ltd. (L&T) is the latest major Indian company to enter the burgeoning sovereign cloud market, joining Tata Consultancy Services (TCS) and Bharti Airtel in establishing cloud infrastructure specifically for India. This move comes as demand for sovereign cloud solutions is expected to surge, driven by increasing data localization and stringent privacy regulations.

The sovereign cloud market in India is estimated to reach $21 billion by 2033, presenting a significant opportunity for local tech players. These companies will compete with global giants like Google and Microsoft, who are also vying for a share of this rapidly expanding market.

Seema Ambastha, chief executive of Vyoma, L&T's cloud and data centre business, noted that demand for sovereign cloud is rising not only from government bodies but also from regulated sectors such as financial services, healthcare, and telecommunications, where data localization is a critical requirement. L&T anticipates that sovereign cloud customers will contribute to 50% of its net cloud business.

What is Sovereign Cloud?

Sovereign cloud refers to a digital platform that is entirely based within a country's borders, ensuring that data is stored, processed, and governed locally. This includes everything from the code base to the physical data centers, completely isolated from any external access. By keeping data within national boundaries, sovereign clouds aim to provide enhanced data security, regulatory compliance, and protection against foreign surveillance and cyber threats.

Drivers of Sovereign Cloud Adoption in India

Several factors are propelling the adoption of sovereign cloud in India:

• Data Privacy Concerns and Regulatory Compliance: The increasing digitalization has made safeguarding sensitive data paramount. The Digital Personal Data Protection (DPDP) Act, enacted in 2023, mandates strict controls over data collection, processing, and storage within Indian borders.
• National Security: Keeping critical data within the country's control mitigates risks associated with foreign surveillance and cyber threats, protecting it from extraterritorial laws.
• Economic Growth: A robust domestic cloud ecosystem can stimulate innovation, create jobs, and reduce dependency on foreign cloud providers.

Key Players and their Offerings

Several Indian companies are actively developing sovereign cloud solutions:

• Tata Consultancy Services (TCS): TCS is considered an early mover with its SovereignSecure Cloud, attracting interest from government agencies.
• Bharti Airtel: Airtel launched its sovereign cloud with the aim of providing cost savings of 30-40% compared to competitors.
• Larsen & Toubro (L&T): L&T's entry into the sovereign cloud market signifies the growing importance of this sector.
• Reliance Jio: JioCloud is targeting small and medium-sized enterprises (SMEs) with its sovereign cloud offerings.
• Yotta Data Services: Yotta is also planning to build a sovereign cloud to cater to the increasing demand.

The Importance of Cloud Sovereignty in the AI Age

As India aims to be a leader in Artificial Intelligence (AI), cloud sovereignty has become even more critical. AI systems thrive on data, and the more sensitive the data, the higher the stakes. Hosting AI models on cloud platforms under foreign jurisdiction can expose Indian enterprises to external laws and regulations. Sovereign cloud ensures that Indian data remains within national borders, providing operational sovereignty and protecting intellectual property.

Challenges and the Way Forward

While the sovereign cloud market presents significant opportunities, there are challenges to overcome. New entrants may struggle to match the free cloud credits and startup support offered by global hyperscalers. Overcoming IPv4 scarcity is also crucial for India's digital independence. To foster a thriving sovereign cloud ecosystem, India needs to focus on innovation, building trust, and ensuring digital independence.