How it works: The India-UAE plan to offshore sovereign data

India and the UAE are exploring the creation of mutual “data embassies” as part of a sweeping new digital infrastructure partnership. Announced during UAE President Sheikh Mohamed bin Zayed Al Nahyan’s state visit to India in January, the ambitious proposal is part of bilateral collaboration on 8 exaflops of compute capacity and 2 GW of dedicated data center capacity.

What is a data embassy? A data embassy operates much like a physical diplomatic mission, but for a nation's critical digital assets. It is a secure offshore setup where databases, servers, and cloud systems are hosted in a foreign country while remaining under the complete sovereign control of the home country. The model is designed to keep essential digital services online even if domestic infrastructure faces a catastrophic disruption, Sagar Vishnoi, co-founder and director at Future Shift Labs, tells EnterpriseAM.

“It’s basically like creating a secure repository of strategic information — like an extension of a country’s digital infrastructure in another geography, so that even in case of disruption, the data and governance systems continue,” Vishnoi tells us.

The proposal slots neatly into a broader bilateral push spanning AI, emerging technologies, and supercomputing. The UAE's aggressive digital infrastructure build-out, heavy investments in data centers, and advanced AI ecosystem — bolstered by institutions like the Mohamed bin Zayed University of Artificial Intelligence — make it an ideal partner for India, Vishnoi noted.

“This is a win-win situation for both countries. A data embassy is a relatively new concept — where a country’s data, like cloud systems, databases, and secure infrastructure, can be hosted in another country under specific compliance and policy frameworks,” Vishnoi says.

Working out the rules of the road: The two nations have agreed to explore these data embassies under “mutually recognized sovereignty arrangements,” according to India's Ministry of External Affairs.

If the concept takes off, it will drive massive demand for data centers, cloud storage, and cross-border cybersecurity solutions. “There will likely be a surge in demand for data centers, cloud storage, cybersecurity services, and cross-border data management solutions,” Vishnoi says, highlighting that digital infrastructure is becoming part of international economic engagement, “similar to how trade or energy corridors work.”

The scale of ambition: The broader bilateral tech partnership targets an immense 8 exaflops of compute capacity alongside the 2 GW data center build-out. Feasibility studies are slated to wrap up by mid-2026, paving the way for groundbreaking in early 2027, with Phase 1 operations targeted for 2028.

Building out this infrastructure won't be cheap or easy. Tier-4, AI-ready data centers cost roughly USD 11.3 mn per MW to construct. Meanwhile, high-end sovereign hardware — like advanced graphics processing units (GPUs) and specialized cooling systems — is facing severe supply chain bottlenecks, with lead times stretching up to 18 months.

Then there's the regulatory framework. Both nations will have to navigate a complex maze of jurisdiction, access rights, security standards, and dispute resolution mechanisms. Aligning India’s Digital Personal Data Protection Act with the UAE’s distinct data frameworks will be a critical first step.

“The idea is that even though the infrastructure is physically located in another country, the data remains under the home country’s sovereignty and is protected from host-country interference," Vishnoi says. "But these are things that both governments — especially external affairs ministries — will need to work out in detail.”

What’s next? The proposal remains early-stage and will depend on whether India and the UAE can agree on jurisdiction, access rights, cybersecurity standards, and sovereign protections. If it moves forward, data embassies could add a new digital layer to the India-UAE economic corridor.