The year 2025 was marked by contradictions and unresolved tensions in global technology markets. For India, this played out in a familiar struggle: Finding the right balance between market forces and government intervention.
First, the idea of sovereignty made a forceful comeback and inevitably spilled over into the interconnected world of technology, a domain fundamentally at odds with rigid notions of control. The continuing Ukraine–Russia war, intensifying global trade tensions, and persistent uncertainty in high-tech supply chains—fuelled in no small part by the revival of export controls by major powers—have collectively put sovereignty back in focus. This has catalysed a return to policy conversations that were once considered inimical to technological progress, much as tariffs were once seen as unquestionably harmful to global trade. Today, those assumptions are being re-litigated.
India has had cyclical flirtations with technology sovereignty. The last major wave centred on data sovereignty, or the idea that data generated in India must remain within its jurisdiction. The next wave appears to be control over the physical infrastructure where data resides; the cloud. Either way, 2026 will force a hard choice: Can India credibly aspire to be a major digital power and a global processing hub, while simultaneously seeking ever tighter control over data and infrastructure?
Part of the answer is already visible in Europe’s experience. European efforts to impose stringent tech sovereignty measures on American firms have begun to provoke sharp pushback. The US most recently imposed visa bans on five prominent Europeans, closely associated with efforts to regulate American technology companies. At the same time, Europe itself is rethinking its regulatory posture, with growing calls to loosen data restrictions to allow its fledgling AI industry to scale. The lesson is clear: Sovereignty pursued without regard to market realities often carries geopolitical and economic costs.
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India’s AI ambitions
If sovereignty framed the policy mood of 2025, artificial intelligence defined its economic momentum. The AI ascent continued unabated across industries, even as India struggled to articulate a coherent regulatory approach. Much of this rise is driven by ballooning capital expenditure on AI infrastructure, indirectly financed by American retirement savings, to levels that have convinced many observers that a bubble may be forming. But for India, the key question is not obsessing over when this bubble might burst. It is how AI is already reshaping markets, labour, and society.
In this context, 2026 must be the year India sobers up about AI regulation. So far, the approach has been scattered and internally inconsistent. Consider recent proposals to mandate watermarking of all AI-generated content on social media platforms. Aside from being impractical, such rules risk reversing long-standing legal protections that user-generated platforms enjoy; protections that hinge on reasonable due diligence, not prior restraint or exhaustive attribution.
Similarly, a deeply regressive committee report examining generative AI and copyright has floated the idea of rate-setting for copyrighted datasets licensed for AI training. Proposals like these seem almost designed to fail. They adopt a bureaucratic, command-and-control mindset that is ill-suited to an era where market-based mechanisms evolve faster and more effectively than government mandates. India cannot ride the AI wave if it simultaneously tries to dam it.
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Industries at risk
A third takeaway from 2025 is that value creation is far harder than value destruction, even in fast-moving tech markets. Few sectors illustrate this better than gaming. The past year was apocalyptic for India’s gaming industry. Real-money games were banned amid concerns over addiction, fraud, and money laundering. While these concerns are not trivial, the blunt regulatory response has left the broader gaming ecosystem in deep distress.
It will not recover easily. Experimental business models are unlikely to compensate for the loss of momentum. Real-money gaming had provided a burgeoning ecosystem of creators and developers space to grow through cross-subsidisation. Once an ecosystem collapses, rebuilding it is neither quick nor guaranteed.
A similar risk looms over the digital streaming sector. If stricter content regulations are introduced, as suggested during Supreme Court proceedings in the Ranveer Allahbadia case, or in the draft broadcasting bill that may be revisited in 2026, the economic impact could be equally damaging. Digital streaming already accounts for more than half of total advertising revenues in media, and a large share of high-quality content. A heavy regulatory hand could deliver a body blow to one of India’s few fast-growing cultural and economic industries.
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Whole of government approach
Finally, 2026 may mark a reckoning for compliance-led cybersecurity regimes. A relentless rise in online scams and frauds, now one of India’s largest criminal enterprises, has exposed the limits of checkbox compliance. These crimes increasingly have cross-border dimensions, intersecting with human trafficking, terror financing, and organised crime.
This problem cannot be wished away through traditional enforcement toolkits like additional reporting requirements, suspicious transaction reports etc. What is needed instead is a new institutional backbone to combat financial crime—one that combines a whole-of-government approach with a whole-of-digital-interactions perspective.
Consider the now-familiar ‘digital arrest’ scam. A victim is contacted through a messaging app or spoofed call, threatened in the name of law enforcement, and coerced into transferring money through banks or payment apps, often across state and national borders. Each institution involved sees only a fragment: Banks see transactions, telecom companies see spoofed calls, platforms see policy violations, and law enforcement steps in only after the damage is done. The scam succeeds because it lives in the gaps in between.
As India enters 2026, the challenge is no longer one of ambition but of institutional and policy coherence. The choices made now will determine whether future technology becomes a force multiplier for growth, or a casualty of our past.
Vivan Sharan is a Partner at Koan Advisory Group. Views are personal.
This article is part of ThePrint-Koan Advisory series that analyses emerging policies, laws and regulations in India’s technology sector. Read all the articles here.
(Edited by Theres Sudeep)