While sovereign cloud and artificial intelligence are key to our digital independence, do they impact innovation negatively, and given the rise of agentic AI, how is data sovereignty evolving? In conversation with Gaurav Agarwal, vice president, technology, IBM India and South Asia.
Q. Why is digital sovereignty critical for India's ambitions on sovereign AI?
India has emerged as a significant player in the digital landscape, producing digital public infrastructure and adopting AI. However, relying on external digital platforms poses some strategic risks. Digital sovereignty is about having choices, leverage, and ensuring business continuity in a multipolar technology environment. The focus has shifted from complying with regulations to operating and innovating on one's own terms. With AI, the scope of digital sovereignty has expanded beyond data residency to include continuous governance, auditability, and accountability of AI systems.
As AI increasingly powers decisions across sectors such as banking, healthcare, telecom, and government, trust becomes non-negotiable. Enterprises must retain ownership of their data and ensure AI systems are transparent, auditable, and aligned with India's policy and societal priorities. Hybrid cloud enables this balance, keeping sensitive data local while still allowing organisations to innovate at global scale. Sovereign AI is not about limiting innovation; it is about enabling India to build trusted, competitive AI systems that can scale responsibly and confidently, both domestically and globally.
Q. Is there a negative impact on the innovation ecosystem when there's a focus on sovereign cloud?
I don't believe so, because when implemented thoughtfully, sovereign cloud strengthens innovation. Sovereignty is not about isolation; it is about creating trusted digital foundations that allow innovation to scale. Sovereign cloud models built on open, hybrid architectures give organisations the freedom to innovate while meeting regulatory requirements. They allow enterprises to collaborate globally, adopt open technologies, and protect intellectual property at the same time.
In India, this is especially important for regulated industries and digital public infrastructure. When businesses are confident that their data and IP are secure and compliant, they are more willing to experiment, adopt AI, and build localised solutions. Sovereign cloud, therefore, becomes an enabler of deeper innovation, grounded in trust, resilience, and long-term value creation.
Q. With the rise of agentic AI in 2026, how is data sovereignty evolving beyond data residency?
Data sovereignty is no longer just about where data sits; it is about how data architecture is designed for control, governance, and real-time decision-making. With agentic AI, systems continuously act across workflows, making sovereignty both an architectural and governance challenge.
The principle is simple: AI must come to the data, not the other way around. Hybrid architecture makes this possible. For example, IBM recently announced the acquisition of Confluent, which is a leading open-source enterprise data streaming platform that connects, processes, and governs data in real time, foundational for the deployment of AI. In addition, solutions like watsonx help enterprises activate and govern proprietary data at scale, while providing guardrails to ensure AI models remain transparent, compliant, and accountable. Together, such capabilities allow organisations to deploy agentic AI confidently, embedding intelligence into operations without losing control over data, decisions, or regulatory obligations.
Q. How does the Digital Personal Data Protection Act influence technology strategy for businesses today?
The DPDP Act highlights the importance of trust, transparency, and accountability in the digital economy. It empowers individuals by emphasising consent management and data minimisation, while encouraging enterprises to embed privacy and governance into their architecture from the outset, thereby ensuring compliance and control over personal data. The DPDP Act has elevated data responsibility to a board-level priority. It directly impacts how organisations design their data, cloud, and AI strategies. Businesses now need clear visibility into data ownership, access, consent, and lifecycle management.
Organisations that treat the DPDP Act as a strategic opportunity, rather than just a compliance requirement, can use it to modernise their data platforms, build customer trust, and create a stronger foundation for responsible tech-driven growth.
Q. What does a CIO roadmap look like given current AI and hybrid cloud trends?
The CIO roadmap today starts with hybrid cloud as the default architecture, providing flexibility, resilience, and sovereignty. This creates the foundation to scale AI securely across the enterprise.
The next shift is from AI experimentation to workflow-centric transformation, where AI and automation are embedded into core business processes to deliver tangible productivity gains. Data strategy is equally critical, breaking silos, modernising platforms, and ensuring data is AI-ready and well governed.
Finally, talent and partnerships matter. CIOs must invest in skills and work with trusted technology partners to manage complexity and accelerate outcomes. The role of the CIO has evolved, from managing IT to enabling business growth, resilience, and long-term competitiveness in the AI era.
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