New Cloud lobby seeks 'national asset' status for India's strategic data

The Bharath Digital Infrastructure Association (B-DIA) — set up just a month ago with an initial membership of over 14 home-grown Cloud operators and other digital infrastructure players — is urging the government to classify strategic data as a “national asset”, on a par with oil, power, and defence, and to restrict its storage under foreign control.

 

The association, which counts VVDN Technologies, E2E Networks, and Seclore among its members, has demanded that all government and public sector undertaking applications be hosted in sovereign Cloud environments. It has communicated its views to the Prime Minister’s Office, Ministry of Finance, and Ministry of Electronics and Information Technology, and discussions with the government are ongoing.

 

Speaking to Business Standard, B-DIA Secretary-General Abhishek Bhatt said the body has asked the government to support Indian Cloud service providers (CSPs) through production-linked incentive (PLI)-like schemes to build national Cloud capacity.

 

Another key suggestion, Bhatt said, is the removal of all references to open government data in free trade agreements (FTAs) and the rejection of “source code surrender” clauses — concerns that arose during the recently concluded India-UK FTA negotiations.

 

The association has also proposed the imposition of a sovereign data value tax on foreign CSPs and software-as-a-service (SaaS) operators monetising Indian user data. It wants India-controlled encryption and internet protocols mandated to prevent backdoor access.

 

B-DIA is further lobbying for mandatory government-backed data backups, physical audits, and source code access from all foreign vendors operating in sovereign sectors.

 

Bhatt said that while the Digital Personal Data Protection Act addresses user privacy, it does not equip the government with tools such as taxation of digital consumption or control over cross-border data flows. There is also no jurisdictional clarity over foreign SaaS, artificial intelligence, or Cloud platforms operating in India.

 

The association has raised alarm over the strategic risk of foreign dominance in India’s Cloud backbone. It pointed out that 90 per cent of the country’s Cloud infrastructure market is controlled by foreign hyperscalers, who monetise Indian data through foreign-governed virtual private Clouds (VPCs) while routing revenues via offshore jurisdictions with minimal tax outgo.

 

In contrast, Indian CSPs have combined revenues of only ₹10,000 crore and pay full taxes, while the top three global technology players earn over ₹23,000 crore in Cloud revenues in 2023-24 but contribute little or no tax in India. Bhatt also flagged the US’ “Big Beautiful Bill”, under which Section 899 authorises the US government to retaliate against any country imposing taxes on its digital firms.

 

According to B-DIA estimates, 66 per cent of government Cloud data is hosted with foreign CSPs, mostly on VPCs, which was never the original intention. With the formation of the new body, Bhatt said, there is growing interest from home-grown players keen to join the initiative.

 

Home-grown Cloud firms’ key demands

 

·         Offer PLI-style incentives to Indian providers

 

·         Levy a sovereign data value tax on foreign CSPs and SaaS firms

 

·         Mandate India-controlled encryption and IP to block backdoor access

 

·         Reduce reliance on foreign hyperscalers holding 90% of India’s Cloud market