In a significant move towards strengthening data sovereignty, Microsoft has announced plans to enable local data processing for its AI-powered Microsoft 365 Copilot in India by the end of 2025. This development will allow Indian users to process and store their Copilot-generated data entirely within the country’s borders, offering more control, security, and compliance with regulatory standards.
India is among the four countries — alongside Japan, the UK, and Australia — where Microsoft will introduce this feature by 2025. The company aims to extend this capability to an additional 11 countries by 2026, bringing the total to 15 nations benefiting from in-country data processing.
The move is part of Microsoft’s broader initiative to enhance governance and security for AI interactions across Microsoft 365 apps, including Word, Excel, PowerPoint, Outlook, and Teams. Under this model, all Copilot interactions and data will be processed and stored in local data centers, ensuring that sensitive information does not leave the country.
“Our principle is clear: your data, your control—wherever you operate,” said Paul Lorimer, Corporate Vice President, Office 365 Enterprise and Cloud Engineering, reaffirming the company’s commitment to privacy and transparency.
According to Microsoft, this initiative is particularly targeted at governments and highly regulated industries, such as finance, healthcare, and energy, which often face strict compliance requirements around data localization. By allowing in-country data storage, Microsoft provides these sectors with greater autonomy and trust over their digital assets.
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Microsoft stated that local data processing will not only strengthen regulatory compliance but also enhance system performance by reducing latency. When Copilot interactions are processed within a user’s country, it minimizes data travel distances and accelerates response times, creating a faster and more seamless experience for users.
Currently, Microsoft provides in-country data residency for Microsoft 365 and Microsoft 365 Copilot customers in 27 countries, along with in-region processing for nations within the European Union’s Data Boundary. With the inclusion of 15 additional countries in its data processing framework, Microsoft aims to expand the accessibility and reliability of its AI systems globally.
By 2026, countries such as Canada, Germany, Italy, Malaysia, Poland, South Africa, Spain, Sweden, Switzerland, the United Arab Emirates, and the United States will also have the option for localized Copilot data processing.
This initiative aligns with growing global concerns around data sovereignty — the idea that data should be governed by the laws of the country where it originates. Governments worldwide are increasingly implementing regulations requiring tech companies to process and store citizen data domestically. Microsoft’s move is seen as a proactive step in supporting this shift.
The company emphasized that in-country processing offers clients “a choice for the location of both AI data processing and residency,” enabling organizations to adopt Microsoft 365 Copilot at scale with confidence in compliance and governance.
In October, Microsoft reaffirmed its commitment to protecting user data from external access. The company said it would notify customers of any foreign government orders that demand data access or service suspension and challenge such orders through legal means when appropriate.
“Microsoft will use best efforts to inform customers of any foreign government orders mandating service suspension, advocate for withdrawal of any such order through legal channels, and may seek injunctive relief to preserve service continuity,” the company stated.
This policy underscores Microsoft’s ongoing efforts to maintain customer trust and ensure business continuity even amid global data privacy challenges.
For India, which is witnessing rapid digital transformation across industries, this announcement comes as a boost for businesses relying on Microsoft’s cloud and AI ecosystem. Localized processing will help organizations comply with India’s emerging data protection norms while maintaining high standards of performance and security.
By enabling in-country AI data storage, Microsoft aims to empower Indian enterprises, government agencies, and institutions with greater autonomy over their digital operations — marking a major step toward a secure and sovereign digital future.
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