India’s aspiration to establish foreign sovereign data embassies in GIFT City encounters legal challenges due to the absence of explicit protections against domestic search, seizure, and access, as experts call for a specialised legal framework inspired by Estonia’s model.
Countries such as Singapore and the United Arab Emirates have signalled interest in hosting data embassies in India, but New Delhi’s plan to turn GIFT City into a base for foreign sovereign data faces a fundamental problem: the law does not yet clearly protect such facilities from domestic search, seizure or access powers. Legal specialists say that without a dedicated framework, foreign governments are unlikely to place their most sensitive records in India, no matter how advanced the infrastructure may be.
The idea is not without precedent. Estonia has already established a data embassy in Luxembourg, a secure site for storing critical government systems outside its borders, and that arrangement is treated as a benchmark for digital continuity and sovereign control. According to Estonian and Luxembourg officials, the model works because the two countries backed it with a formal agreement that spells out legal protections, access rights and immunity-like safeguards for the stored systems and the premises housing them.
In India, the concept was first flagged in the Union Budget for 2023 and was mentioned again in the interim budget for 2024, which said such facilities would be enabled mainly through bilateral agreements. But lawyers in GIFT City say the framework remains unfinished. Ketaki Mehta of Cyril Amarchand Mangaldas said foreign states would need clear, binding protections covering confidentiality, ownership, storage terms and immunity from domestic laws on search, seizure, interception and other forms of access. Supratim Chakraborty of Khaitan & Co said India’s current legal regime, including the Information Technology Act, 2000 and the Digital Personal Data Protection Act, 2023, was not designed with sovereign data embassies in mind.
Experts say full diplomatic immunity may not be necessary, but “functional immunity” would be essential for the premises, systems, archives and data housed inside a data embassy. Khaitan & Co has suggested a “digital inviolability” model under which India would retain control over local infrastructure, utilities and safety matters, while the foreign state would keep exclusive legal control over the data itself, subject only to agreed access rules. Legal specialists also say the project would need coordination across Parliament, the Ministry of External Affairs, the Ministry of Electronics and Information Technology and the International Financial Services Centres Authority, which has already prepared a framework and draft memorandum of understanding that remains under government review. Gartner has estimated that by 2029 at least 15% of nations in geopolitically volatile regions could have formal data embassy agreements, reflecting rising demand for trusted data storage as cyber risks and political instability grow.
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