A year after Nayara blip, Microsoft promises Indian clients full sovereign cloud and data control

New Delhi, Sept. 22 — Mumbai,

New Delhi :

Microsoft will grant its Indian clients “full sovereign control”, including where their data resides, which data centres are used, and which laws apply to them, a top executive told Mint. The move comes a year after the Big Tech firm temporarily suspended cloud services for Nayara Energy, an Indian energy joint venture.

In an interview on Monday, Puneet Chandok, president for South Asia at Microsoft, said the company now provides clients with “full control of the stack” as well as “full access and control” over their proprietary data.

“On the data side, we are very clear that if customers want it in-country, it’s their control, their keys, their locations and their chips. We give in-country data residency, and are governed by local laws. We give sovereignty with sovereign controls, confidential compute, and customers own their data and where they want to keep it,” Chandok said.

The executive’s words hark back to 22 July 2025, when Nayara Energy’s operations on Microsoft’s cloud services platform Azure were halted abruptly. By 30 July, Microsoft issued clarifications and reinstated Nayara’s services, underlining that the disruptions occurred due to the enforcement of European Union sanctions on Russia. Rosneft, Russia’s largest state-owned energy services firm, owns 49% of Nayara.

Under the updated framework, Microsoft will grant clients complete legal control over their on-cloud data storage, processing, and operations-ensuring overseas regulatory directives don’t interrupt service delivery, Chandok said.

In-country data residency means storing a client’s business information within a country’s geographical borders. Meanwhile, confidential computing protects data while it is actively being processed in data centers, allowing companies to keep their information encrypted and secure even when processed on foreign infrastructure.

Such features, Chandok claimed, have boosted its sovereign client base in India, which now includes 22 states. “There are two platforms: e-Sanjeevani with 400 million-plus healthcare consultations, and e-Shram, which 310 million unorganized workers use for job searches.” Chandok added that Centre and state governments account for a “significant” portion of Microsoft’s Azure client base in India, though he declined to share a precise breakdown.

Sovereign cloud services have been on the rise of late. Microsoft rivals Amazon and Google also offer a spate of sovereign cloud services in India, with homegrown data centre operators such as Yotta also joining in. In July 2025, independent market researcher IDC projected India’s public-sector cloud market would expand to more than $30 billion in the next three years, growing 23% annually.

Not everyone, however, is this bullish. On 29 May, Sashi Sreedharan, India managing director of Google Cloud, told Mint that the country’s sovereign cloud spending “remains at an early stage”.

Industry stakeholders believe the truth may lie somewhere in the middle. Sanchit Vir Gogia, founder and chief analyst of tech consultancy firm Greyhound Research, said while the rise of sovereign cloud services is “inevitable”, the growth spurt may not arrive immediately.

“Companies such as Microsoft are leaders in the Indian cloud services market, and have long-established government relations. They will eventually leverage these relations to ramp up sovereign cloud services in the country, which will in the long run become a key revenue driver. This, though, will be slow-burn-while clients are likely to make sovereign spending commitments, the translation to real-world revenue may take some time to be realized,” Gogia said.

“While brands have to be conscious about adding redundancy to their data operations, it’s important to note that the data centre regions for Microsoft in India would be owned by Microsoft Corporation India Private Limited, which follows Indian laws. US law is not applicable to the Indian entity, which adds a layer of immunity in case of a sweeping, direct bilateral sanction,” he added.

Others warned that such a complete wipe-out, while unlikely, may not be completely out of the question. Kashyap Kompella, founder of tech consultancy RPA2AI Research, said, “Post-Nayara, Microsoft has strengthened its operating procedures in India, including greater notice, escalation and continuity mechanisms for affected clients, which should provide greater protection and predictability for Indian customers.”

“A hypothetical situation in which the US were to impose wide-ranging sanctions on India would not be a Microsoft-specific issue; it would affect a large number of US and Western companies operating in India. If it were to arise, it would have to be addressed at the diplomatic level rather than through individual corporate decisions alone,” he added.

Microsoft Corporation (India) Private Limited, the holding entity that bills Azure cloud clients in the country, reported Rs.29,302 crore in operating revenue and Rs.1,245 crore in net profit in FY25, according to corporate affairs ministry data accessed via Tofler. Revenue grew 28%, while profit surged nearly 39%. The company is yet to file its FY26 financials.

It has, however, been ramping up its India presence. On Monday, Microsoft announced the operationalization of a fourth data centre in the country, in Hyderabad. Chandok and Microsoft did not disclose the data centre’s size, or how much of the company’s committed $20.5 billion in India data centre spending was used for it.

He claimed, however, that the company is using “zero water” in its operations, and hailed state-level policies for smooth operations. Some of the data centre’s early clients include HDFC Bank, Bajaj Finserv, PB Pay (Policybazaar) and Adani Group, Chandok added.