The Growing Importance of Sovereign Cloud

Perspectives for India

In an increasingly digitised world, data governance has become a key imperative for countries, corporations, and individuals alike. With an increasing number of social and economic activities being conducted online, the importance of privacy and data protection is becoming even more relevant and critical. Sharing of personal information without consent or knowledge is equally of concern. The UNCTAD reports that 137 out of 194 1 countries have enforced legislation to safeguard data and privacy. One key concept that has gained prominence in addressing these concerns is the sovereign cloud. So, what exactly is sovereign cloud?

The construct of sovereign cloud

Sovereign cloud: refers to a cloud computing environment that complies with the legal, regulatory, and security requirements of a specific country or region. The primary distinction between sovereign cloud and the public clouds lies in its strict data residency, sovereignty, and privacy mandates. With sovereign clouds, data is stored and processed exclusively within the borders of a specific jurisdiction, ensuring compliance with local regulations.

This framework ensures that not just personal or sensitive data, but government, financial, and healthcare information remains under the legal authority of the country where it originates, mitigating the risk of foreign surveillance or data breaches. In an age where data is often compared to oil in terms of value, the control over that resource becomes crucial. Organisations benefit from the control they have over data, avoiding external governance risks inherent in using global public cloud services.

The importance of sovereign cloud

Today, the concept of sovereign cloud is rapidly gaining traction among global organisations. A study conducted by Accenture 2 among 300 European enterprises revealed that over one- third of companies have already invested in sovereign cloud, while 44% were planning to make investments within the next few years. Around the world, countries are at various stages of implementing sovereign cloud solutions. However, these efforts universally revolve around the foundational principles of a sovereign cloud: accessibility, control, compliance, and security.

Accessibility and control: Sovereign cloud provides greater control over data, allowing organisations to manage who has access to their information and how it is used. Moreover, the data remains within the country, with provisions for storing it at multiple locations domestically to maintain disaster recovery (DR), business continuity planning (BCP), and data security. This approach safeguards the data if one data centre experiences physical issues such as fire, theft, or other disruptions. By having copies of the data distributed across various sites within the country, companies can ensure continued accessibility and protection.
Compliance: With the proliferation of data protection laws such as GDPR in Europe and the Cloud Act in the United States, organisations are increasingly required to ensure that data
1. https://unctad.org/page/data-protection-and-privacy-legislation-worldwide
2. https://www.accenture.com/in-en/insights/cloud/sovereign-cloud
resides within the geographic boundaries of specific jurisdictions. Hence, sovereign cloud allows businesses to meet local regulatory requirements by ensuring data does not leave the borders of the country.
Security: Sovereign cloud mitigates the risks associated with foreign access to sensitive data. In addition, by ensuring that data remains within a country’s borders, it reduces the likelihood of unauthorised access and data breaches. Concerns about government surveillance under laws like the US Cloud Act (which permits the US government to access data stored by US-based companies, regardless of the physical location) have pushed companies and governments towards more secure, localised cloud solutions.

The journey of sovereign cloud adoption in India

India is witnessing a notable shift towards sovereign cloud adoption, driven by increasing concerns around data privacy, security, and compliance with local regulations. The Government of India’s Digital India programme is aimed at fostering a digitally empowered society and knowledge-driven economy. As the country advances towards supporting its rapidly growing economy, safeguarding data has become increasingly vital. Research indicates that India witnessed 3,201 cyberattacks in the second quarter of 2024, with a 46% increase over the previous year, significantly higher than global average of 30% 3 . This scenario underscores the urgent need for stringent data privacy and security measures, underpinned by the pertinence of data sovereignty.

Over the past few years, there have been several initiatives rolled out in the direction to ensure data security in India. One key initiative is the government's ‘MeitY (Ministry of Electronics and Information Technology) Cloud Initiative’, which aims to build a secure cloud infrastructure for government data. The government’s drive to create a sovereign digital ecosystem aligns with its goal of ensuring data security and sovereignty in an era where data is a critical asset. Another recent initiative is the most recent Digital Personal Data Protection Act 2023 (DPDA), passed in August 2023, which introduces strict requirements for data sovereignty. Key provisions include data localisation, enhanced security protocols, and a comprehensive data governance framework.

The future of sovereign cloud

Global spending on sovereign cloud is on the rise, with IDC predictions expecting it to reach $258.5 billion by 2027 4 . Sovereign cloud is not just a buzzword but a necessary evolution in the way data is managed and secured in an increasingly complex regulatory environment. With data privacy and compliance becoming critical concerns for both governments and businesses, sovereign cloud offers a robust solution by providing control, security, and regulatory compliance. While there are challenges such as higher costs and limited scalability, the benefits of sovereign cloud cannot be ignored. As global trends continue to evolve, sovereign cloud will likely play a pivotal role in shaping the future of data governance.

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