Microsoft to enable local AI data processing for Indian 365 Copilot users by end of 2025

The tech giant will allow Microsoft 365 Copilot customers in India to have their AI data processed locally, aligning with regulatory needs and advancing data sovereignty and compliance goals across key global markets

Microsoft has announced plans to enable local data processing for Microsoft 365 Copilot users in India by the end of 2025, marking a major step toward aligning with India’s evolving data governance and compliance requirements. The initiative will allow AI interactions within the productivity suite to be processed domestically rather than routed through overseas servers.

The company said that in-country data processing for Microsoft 365 Copilot will soon be available in 15 countries, including India, Australia, Japan, and the United Kingdom, as part of its ongoing efforts to strengthen trust and transparency in AI operations.

This move reflects a significant shift in approach from earlier resistance among global tech firms toward data localisation mandates. Since India proposed stricter data storage rules in 2018, cloud providers like Microsoft have rapidly expanded their data centre networks within the country to meet the needs of sectors such as banking, government, and healthcare, which demand local data residency for compliance.

A step toward secure and regulated AI deployment

Microsoft said the decision was primarily driven by governance and security imperatives rather than technical performance improvements. “This offer is designed to enable customers, particularly those in government and highly regulated industries, to access Microsoft 365 Copilot with an additional option for governance, security, and regulatory compliance,” the company stated.

While India already hosts major data centres for global tech giants like Google, Meta, and Microsoft, few are currently equipped with the advanced GPUs required to power large-scale AI workloads. However, this trend is beginning to change, with companies such as OpenAI and Google exploring high-performance AI data infrastructure in the country.

The move underscores Microsoft’s broader strategy to integrate AI responsibly while ensuring compliance with local laws and providing customers with greater control over their data—a key factor as nations tighten digital sovereignty frameworks worldwide.