US corporations must not control India’s strategic choices

Recently, India was jolted by a stark reminder of its digital vulnerability when Microsoft abruptly suspended cloud and productivity services to Nayara Energy, an Indian oil refiner partly owned by Russia’s Rosneft. This suspension was not rooted in Indian law or regulation, but in compliance with newly imposed European Union sanctions against Russia.

Platforms such as Azure and Office 365 were cut off without prior notice or consultation, hampering Nayara’s operations and threatening the continuity of supply chains vital to India’s energy security. Nayara was left with no choice but to seek urgent legal relief from the Delhi High Court.

Though services were eventually restored, the episode exposed a frightening reality: the digital infrastructure crucial to India can be severed by foreign corporations enforcing external political agendas.

A transactional turn

In his second term as United States’ President, Donald Trump has adopted a harsher, more transactional posture toward India — slapping 25% tariffs, threatening additional penalties over discounted Russian oil imports, and allowing US sanctions to hit Indian companies operating well within their legal bounds. The US also imposed sanctions on several Indian firms importing petrochemical products from Iran — moves that blatantly disregard India’s sovereign energy policies. Punitive measures against Indian businesses are enforced not only by government agencies but now also by private US corporations, transforming them into instruments of US foreign policy.

When corporations serve foreign policy

Such corporate intervention in international affairs is not a recent phenomenon. History is rife with examples of multinational companies acting as de facto arms of their home nations’ geopolitical ambitions.

In 1954, the United Fruit Company, a major US banana exporter deeply embedded in Guatemala, lobbied the US government to overthrow democratically-elected President Jacobo Árbenz. This led to a CIA-backed coup that plunged the country into decades of violent instability and a legacy of political dysfunction.

In 2014, French banking giant BNP Paribas was fined $8.9 billion by US authorities for processing transactions with Sudan, Cuba, and Iran — countries sanctioned by the US, but not necessarily by France or the European Union. The penalty underscored how US sanctions can force foreign companies to comply with US policy, even if such transactions are legal in their own jurisdictions.

In 2018, French energy giant Total SA was forced to withdraw from Iran’s South Pars gas project after it failed to obtain a waiver on US sanctions, despite the project fully complied with Iranian and European laws. Chinese telecom giant ZTE, that same year, was hit with a $1.4 billion fine and a temporary ban from accessing US technology for violating US sanctions — crippling the company and sending shockwaves through the global telecom supply chain.

The Starlink and Meta precedents

In the 2022 Ukrainian conflict, Elon Musk reportedly ordered a Starlink blackout during a critical counteroffensive in Kherson, fearing that continued satellite coverage might provoke a Russian nuclear response. The blackout severely disrupted Ukrainian drone and artillery co-ordination, highlighting how a private US executive, acting without formal accountability, influenced the course of a sovereign nation’s military operations.

Likewise, Meta’s decision, in early 2025, to dismantle third-party fact-checking in the US was seen as a concession to the incoming Trump administration’s rhetoric against ‘censorship’. This shift harmed digital content governance globally, with misinformation surging in democracies like India that rely on these platforms for public discourse.

Extraterritorial laws and legal collisions

At the heart of this lies a legal architecture that empowers such corporate behaviour. US statutes, like the International Emergency Economic Powers Act and the policies enforced by the Office of Foreign Assets Control (OFAC), were significantly fortified under President Joe Biden’s Executive Order 14114 in December 2023. This expanded the extraterritorial reach of US sanctions, penalising foreign financial institutions and companies that indirectly support Russia’s military-industrial complex.

Compliance has now become a survival imperative. Access to the US dollar system, international banking, and global markets hinges on adherence to these sanctions — regardless of domestic law. Following Biden’s lead, the Trump administration’s 2025 mandate demanding suspension of ‘potentially adversarial’ digital services without transparent procedures has further eroded sovereignty in the digital domain.

The US laws often conflict with other countries’ legal systems. For instance, US secondary sanctions on Iran and Cuba have clashed with the EU’s Blocking Statute, which aims to protect European firms from extraterritorial overreach. Deutsche Telekom’s contractual issues with Bank Melli Iran highlighted such tensions. Additionally, US discovery rules often conflict with Europe’s GDPR protections. China, (which has faced multiple US sanctions), recognising the danger, passed its own Anti-Foreign Sanctions Law in 2021 to counter external coercion.

India’s sovereignty at stake

India now stands at the forefront of this expanding legal confrontation. In late 2024, the US’ Office of Foreign Assets Control sanctioned 19 Indian companies and two individuals under Executive Order 14024 for allegedly facilitating circumvention of US sanctions on Russia.

The Nayara blackout further revealed India’s limited control over critical infrastructure that supports not just commerce but national security.

These developments are not abstract — they pose existential threats. When multinational corporations can unilaterally disable services to lawful Indian businesses, or when foreign nations impose their domestic policies on Indian soil, India's digital and economic sovereignty is at risk.

India must act decisively. It must legislate strong data localisation laws to ensure that sensitive digital assets remain within Indian jurisdiction. Investment must flow into indigenous platforms and open-source technologies that reduce dependency on foreign infrastructure. India’s legal framework must also be updated to mandate prior notice, transparency, and due process before any foreign corporation is allowed to disable services.

Finally, India should champion global norms — through BRICS, the G20, and the UN — that guard against corporate overreach and reaffirm national sovereignty in the digital age.

Control must rest at home

The stakes could not be higher. Nayara’s blackout, Starlink’s wartime disruption, Meta’s algorithmic flip-flops, and the swelling force of extraterritorial US laws illustrate one truth: economic independence in the 21st century is inseparable from digital independence.

Without urgent strategic intervention, India’s digital future may be dictated not by New Delhi, but by boardrooms in Redmond, Menlo Park, or Washington. That would be a betrayal not just of sovereignty, but of the people and industries relying on a free, open, and secure digital ecosystem.

(Abhishek Patni is a New Delhi-based senior journalist. X: @Abhishek_Patni)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.