India’s phenomenal rise as a global hub for data embassies

In an era where cyber threats and geopolitical complexities are rapidly evolving, nations worldwide are increasingly turning to innovative solutions to safeguard their critical digital data. One such concept is the data embassy—secure, offshore data centers designed to store and protect a country’s essential information systems in collaboration with other nations. 

Originally pioneered by Estonia, data embassies offer an additional layer of protection by distributing crucial data to secure, remote locations, ensuring continuity even in the face of large-scale cyberattacks or geopolitical conflicts. As this concept gains global traction, India is positioning itself as a prime destination for establishing data embassies.

Central to this ambition is GIFT City, Gujarat's International Finance Tec-City, which aims to establish itself as a global financial hub by providing a conducive regulatory and business environment for international financial services. 

Home to one of the largest data centers in the country, GIFT City offers significant opportunities for data service providers. This vast data center infrastructure not only supports the secure storage of critical national data but also opens avenues for global data center operators to establish their own facilities, contributing to India’s growing prominence in the global data management landscape.

The Indian government is playing a pivotal role in facilitating the establishment of data embassies within GIFT City. The International Financial Services Centres Authority (IFSCA), the regulatory body for GIFT City, is developing a framework to implement a single-window clearance system, streamlining the process for international partners. This initiative aligns with India’s broader Digital India strategy, focused on enhancing cybersecurity, data protection, and fostering international cooperation.

India ideal destination for data embassies

India’s attractiveness as a destination for data embassies can be attributed to several strategic advantages:

Skilled workforce: India boasts one of the largest pools of engineers, technicians, and management professionals globally. This skilled workforce is both technologically adept and available at competitive costs, making India an attractive destination for building a robust techno-functional ecosystem. 

Cost-effective construction: Building a data center in India is significantly more cost-effective compared to western as well as Asian countries. The cost is around USD 6 per Watt in India, compared to USD 10.2 per Watt in Northern Virginia and USD 13.7 per Watt in Tokyo, making India the most favourable market for data center construction.

Affordable electricity: Data centers require vast amounts of energy, and India offers some of the lowest electricity tariffs worldwide. This makes it an ideal location for energy-intensive operations like data centers.

Submarine cable connectivity: India is well-connected globally, with 17 international subsea cables and 14 landing stations in key cities. This extensive network ensures fast, reliable, and secure data transmission both within the country and internationally. 

There are also domestic subsea cables in India to enable the safest and the fastest transportation of data within the country. This robust network infrastructure offers a seamless connectivity that links various countries worldwide and ensures smooth and uninterrupted digital continuity.

Expertise: India's technology prowess is evident in its thriving digital infrastructure ecosystem, which is supported by a multitude of companies that have a deep understanding of market dynamics and challenges. These companies are driving innovation and providing advanced digital solutions that cater to both domestic and international needs. 

These companies are playing a pivotal role by offering tailored services that address the complexities of the digital landscape. This enhances its attractiveness for global partnerships in data embassies and other tech-driven initiatives.

Renewable energy resources: India’s abundant renewable energy sources, including solar and wind power, support eco-friendly data center operations. With the world's largest solar power plant and a total installed capacity of 2245 MW, India offers a sustainable energy supply, reducing carbon emissions and ensuring operational continuity.

Challenges to be overcome

However, establishing data embassies in India presents challenges, primarily centered around legal and sovereignty issues. A comprehensive legal framework is essential to address jurisdictional concerns, ensuring that data embassies operate under protections akin to traditional embassies. 

Questions about data sovereignty, privacy laws, and the applicability of international conventions like the Vienna Convention on Diplomatic Relations must be resolved. Additionally, there is a need to define clear ownership and control over the data stored in these embassies to prevent potential legal conflicts.

Operational and geopolitical challenges further complicate the establishment of data embassies. Furthermore, identifying trustworthy host countries involves careful diplomatic considerations to mitigate geopolitical risks. Standardizing guidelines and best practices across nations is also crucial to ensure consistency and enhance cyber security in data embassies worldwide.

Looking ahead

As India continues to enhance its digital infrastructure and policy framework, it is on track to becoming a global center for data embassies. This strengthens its leadership in IT and cybersecurity, paving the way for new digital diplomacy opportunities. 

The establishment of data embassies not only attracts foreign investments and boosts the digital economy, but also creates employment opportunities, contributing to India’s efforts to become a global hub for secure data storage. 

For sectors like BFSI, which handle highly sensitive data, this development is particularly promising. By leveraging the secure, advanced infrastructure of GIFT City, financial institutions can achieve higher levels of data security, compliance, and operational efficiency. 

As nations navigate the complexities of the digital age, data embassies offer a glimpse into the future of secure and collaborative data management, reshaping the global landscape of digital security.

-- Pinkesh Kotecha, MD and Chairman, Ishan Technologies.