Opinion Shashi Tharoor writes: India must choose digital sovereignty or submit to the new, subtle digital raj

India is not immune to this pressure. Our ability to secure cheap Russian crude was curtailed because no company wished to risk the commercial paralysis that being shut out of the dollar-denominated financial architecture would entail. Equally egregious were the pre-emptive concessions made on digital taxation and digital trade, where the subtle but persistent pressure from Western negotiating partners compelled us to withdraw provisions designed to secure revenue from mega-firms operating within our borders. This pervasive pressure underscores a simple truth: The ascendancy model demands acquiescence from the rest, and drives deep, often invisible, inroads into the digital sovereignty of other nations to maintain its status.

This brings us to the second, and arguably most perilous, option for India: Digital capitulation. The recent actions of Indonesia and Malaysia serve as a cautionary tale. These nations, in their haste to secure trade agreements, have traded away digital autonomy for immediate (and often ephemeral) commercial gains. Indonesia, for instance, has committed to an unconditional, permanent moratorium on customs duties on data flows at the WTO and guaranteed the free export of personal data.

Reports suggest that Malaysia, too, has made alarming commitments not to impose digital services taxes, to refrain from discrimination against US digital services, and, most critically, to discard its right to demand access to “US technology, production process, source code, or other proprietary knowledge”. These are not mere technical clauses; they are the legal scaffolding that precludes a national digital industrial policy. Further, the commitment to consult with the United States before entering into any digital trade agreement that might “jeopardise US interests” is a clear surrender of national sovereignty over this vital area.

The double standard inherent in these dynamics is evident in the US’s forced divestiture of TikTok, demands including mandatory data localisation, majority US ownership in the restructured entity, and US control over the source code — the very provisions that Malaysia has seemingly sacrificed. Clearly, digital trade agreements are not about free trade; they are about cementing digital vassalage.

Self-respecting and self-reliant India must, therefore, resolutely choose the third path: Digital sovereignty. This model involves creating legal and regulatory structures that ensure sovereign control over data exports and unhindered rights to regulate the national digital space. India is a democracy, unlike China; but China’s decision to largely exclude Big Tech from its market, while often criticised, provided the fertile soil for companies like Alibaba, Tencent, and Didi to flourish into multi-billion-dollar global entities. Through deliberate domestic procurement and industrial policy, China built a sovereign compute stack, from hardware to cloud services, that today powers a digital economy accounting for an astonishing 40 per cent of its GDP, valued at over $7 trillion.

Contrast this with India’s $224 billion in software exports. While valuable, this revenue often fails to create the commensurate feedback loops of high-value job creation, sovereign data capital, and proprietary AI development within our own economy. Our exceptional pool of software and semiconductor design engineers has contributed significantly to the creation of trillion-dollar valuations and explosive global growth abroad. Instead of merely pleading for relaxed immigration controls in trade negotiations, we should be leveraging this digital talent as our most powerful negotiating chip to secure our interests.

However, as a democracy with open interactions with the free world, India cannot simply replicate the Chinese model. US mega-firms are deeply entrenched across our national digital landscape and Indian consumers are accustomed to them. The correct approach is not exclusion, but digital industrialisation driven by a strong national policy framework. The notification of the Digital Personal Data Protection Rules — even if some of us may quibble over their details — is a welcome development, ensuring that domestic law prevails over international commitments. Furthermore, the foundations for a sovereign digital future have already been laid through initiatives like the Digital Public Infrastructure (DPI), the Aadhaar system, the India Stack, and strategic focus on AI, semiconductors, and quantum computing.

These indigenous capabilities must be protected fiercely. Any attempt in ongoing free trade agreement (FTA) negotiations to insert clauses that mandate “refraining from adopting or maintaining measures that discriminate against digital services or products of the other party” will be tantamount to digital self-sabotage. Such a commitment would immediately halt every nascent measure currently promoting indigenous digital capabilities, forcing us back into the quagmire of dependency.

India’s path to atmanirbharta in the digital domain requires a clear, unambiguous stance. We must emerge from negotiations in the category of a truly digital sovereign, empowered to promote our own digital giants and capture the wealth generated by our own data. A flourishing, sovereign digital economy promises to unlock trillion-dollar growth and create millions of high-quality employment opportunities, a necessary bulwark against the looming threat of AI-driven layoffs. The choice is clear: Secure our digital future as a sovereign power, or risk becoming a highly digitised, economically consequential, but ultimately subaltern state under a new, subtle digital raj.

The writer is MP, Thiruvananthapuram (Lok Sabha) and chairman, Parliamentary Standing Committee on External Affairs, and former Chairman, Parliamentary Committee on IT