When the Union government, very unquietly, moved a large tranche of official email accounts from foreign service providers to Zoho, reportedly migrating around 1.2 million government IDs, it did more than change an inbox provider. It signalled a deliberate policy posture. Digital sovereignty is now a live instrument of economic policy and geopolitical signalling.
Before we tag this as a chest-thumping move towards "swadeshi," or worse, license-raj protectionism, let us evaluate structural and market realities globally. The three core principles to focus on are (a) network externalities, (b) switching costs, and (c) winner-take-all equilibriums.
Let us take the case of the QWERTY keyboard. What is now a market standard on computers was originally a remnant of the typewriter's layout. The keys in a manual typewriter would jam on high typing speeds, and the QWERTY layout was designed to slow down the typist and protect the instrument. There was an alternative layout – the Dvorak keyboard, which was empirically proven to enhance both speed and user comfort, but lost out in the long run. Why? Because the market could not sustain two different operating standards. The cost of switching (retraining users, building expertise, capex for new equipment, etc.) was extremely high for a user, an organization, or the economy as a whole. The world, therefore, succumbed to a relatively inferior standard.
Many years later, when AT&T was broken down into "baby bells," so did the surrounding infrastructure and supply chains. Many argue that this fragmentation was the very reason that USA lost its superiority in the telecom race, giving way for large telecom operators to mushroom across the world. Learnings from this debacle echoed during Microsoft's anti-trust hearings, where conservative economists argued that the US needed large, strong tech enterprises that could become the standard (monopoly?) for the rest of the world.
Consumer technologies display a unique reality that other sectors do not. End-states are always winner-takes-all equilibriums. The network externalities and switching costs in favor of QWERTY were way too favorable for Dvorak to even have a fighting chance. So is the case for products like Facebook, Uber, Spotify, Google Maps, YouTube, and Microsoft Office, all quasi-monopolies in their markets. MySpace, Lyft, Deezer, MapMyIndia, Vimeo, and Workspace are either dead or a distant second. And a distant by a tall order.
This winner-take-all equilibrium, the ability to own and direct a global protocol, is why governments get involved.
At the simplest level, this is an economic story about market creation and capture. Government procurement confers scale, credibility, and recurring revenue. For an Indian SaaS firm like Zoho, hosting central-government email is an immediate demand shock that lowers entry barriers for local competitors and raises switching costs for large multinationals. The effect is familiar from industrial policy, where public-sector demand can seed domestic champions, crowding in investment, talent, IPs, and supply-chain activity. The private-sector corollary is also true: foreign cloud and productivity vendors now face a tougher competitive calculus in India, where product decisions will be judged not just by price and technology but also on sovereignty goals.
More importantly, the choice is geopolitical. Digital infrastructure is strategic infrastructure. States increasingly view control over data and the code stack as analogous to control over ports or energy grids. The European debate on "digital sovereignty" is explicit about this. The objective is not plain-vanilla protectionism but the capacity to set standards and protocols, and preserve options in a world where U.S. platforms dominate. The hand of the military industrial complex behind many tech firms further drives the motivations of the EU, China, and India to protect their data and their narratives from American influence. How India chooses local suppliers, therefore, becomes a foreign-policy determination as much as a procurement decision.
This pivot will ripple into trade and tariff politics. Tech suppliers are not just neutral economic actors but sit inside value chains that create leverage. In the context of broader U.S–India commercial ties, encouraging indigenous alternatives is a soft form of trade retaliation and strategic industrial policy rolled into one. It reduces dependence on foreign providers whose behavior may be shaped by distant regulatory or political pressures, and it creates bargaining chips in wider negotiations over tariffs, investment screening, and market access. The dynamic is already visible in other bilateral frictions where antitrust probes, data rules, or procurement bans have been used as levers.
Indian founders and their enterprises will have it rougher. As India strengthens its economic position globally, western power-centers are likely to come down hard on Indian founders and their enterprises. The West has historically been more than willing to use economic hitmen, predatory reputational attacks, and the might of the military-industrial complex against challengers. The revolving door that allows senior leaders to move between the public and private sectors only allows for a better understanding of institutional tools for them to leverage against ascending nations and their poster boys. India will not be the first nation whose business leaders will be targeted through their media, executive, legislature, and judiciary.
States historically deploy two tools to limit foreign dominance in digital markets: law and persuasion. France recently banned officials from using platforms like Zoom, Google Meet, and Microsoft Teams, and mandated the homegrown Visio platform instead. Russia's data-localisation regime and China's long-standing restrictions on Western platforms show the legal route, namely, binding rules that reconfigure market access and costs. Equally powerful is the softer route: public shaming, ministerial endorsements, and "swadeshi" campaigns that reshape preferences and create reputational incentives for firms and citizens to switch. India's recent endorsements of local platforms combine both playbooks, namely, audits and procurement on one hand and ministerial signalling and civic persuasion on the other.
Policy trade-offs are real. Overzealous prioritization of domestic suppliers risks insulation, fragmentation, and slower innovation. The challenge for India's policymakers is to calibrate an approach that preserves interoperability and competition while building sovereign capabilities. If done well, the Zoho decision could be the first step in a coherent strategy: leveraging public demand to build competitive indigenous infrastructure, but carefully, without erecting permanent protectionist walls. If done poorly, it risks being read abroad as digital mercantilism and prompting reciprocal countermeasures. Either way, the stakes are national. It is not just about control over the humble government inbox, but a larger, more critical control over the country's strategic lines of communication.
This move is not about how we send emails to each other. It is about how India sends a message to the world.
[Disclaimer: This is an authored article by Anuraag Saxena, who is a public policy expert. His work has been featured in Washington Post, BBC, Vice, The Diplomat, Financial Express, Sunday Guardian, SPAN, Organiser, and Panchajanya. He is a nominated member of the National Tourism Advisory Council, Govt. of India, and Board Member, Centre for Insolvency and Financial Laws.]
