Microsoft Revamps Governance Model for India’s Public Sector after Nayara Dispute, What Changes?

Microsoft has overhauled its governance and compliance model for India’s public-sector and critical-infrastructure customers. The corporate giant has pledged greater contractual transparency, strengthened compliance checks and a new customer forum after a recent service suspension raised alarms about data access and sovereignty.

The company says the refreshed, “risk-based” framework introduces validation checkpoints, escalation pathways and cross-functional oversight. It is designed to keep service interruptions proportionate and legally strong, and to give customers clearer notice and remedies if foreign government orders force suspensions.

Microsoft also committed to using legal channels, including seeking injunctive relief where appropriate, to preserve customer access to data. The company announced these measures at the Microsoft Leaders Forum: India’s Digital Future and in a related blog post.

Nayara Dispute

The revamp follows a high-profile dispute in which refiner Nayara Energy moved the Delhi High Court after Microsoft temporarily restricted access to services and data amid EU sanctions concerns. This move disrupted business communications and prompted judicial intervention before services were restored.

That episode exposed how extraterritorial compliance decisions by global providers can affect India’s strategic firms and infrastructure.

As part of the India-specific push, Microsoft highlighted deeper local partnerships and sovereign cloud options.

The company has already announced collaboration to run Azure AI services on Yotta Data Services’ Shakti Cloud and reiterated earlier pledges on investment and skilling in India — including its $3 billion commitment to expand cloud and AI capacity and train millions through 2030.

Those moves signal a two-pronged approach that offers advanced capabilities while keeping sensitive workloads closer to Indian soil.

Customer Council

Microsoft said it will form a new Customer Council, to be chaired by Puneet Chandok, president of Microsoft India & South Asia, to enable continuous dialogue with public-sector and critical-infrastructure leaders on technology, policy and contractual safeguards.

The company also plans workshops and forums intended to co-design assurances around cybersecurity, AI skilling and data access.

The package addresses two interlinked concerns: the risk that foreign legal or sanction regimes can curtail a customer’s access to cloud services, and the need for clearer contractual guarantees for sensitive government workloads.

Governance Outreach

By codifying escalation routes and promising greater transparency, Microsoft aims to strengthen trust with ministries and agencies that have been cautious about moving critical systems to foreign clouds. The announcement may also raise the bar for other global cloud providers vying for Indian public-sector business.

Key near-term signals will include how detailed the contractual changes are (and whether they become standard in public tenders), how quickly the Customer Council convenes, and whether other cloud vendors match Microsoft’s commitments.