Time to Push for India’s Tech Independence | Nayara Energy, Microsoft and Sanctions

1. On 22nd of July, all of Nayara Energy’s cloud, email and office services provided by Microsoft were abruptly suspended by the company citing compliance with the directions issued by the European Union imposing new sanctions on all Russia linked entities doing business outside of Russia. Nayara Energy, which operates India's second largest oil refinery, was acquired by Russian state oil company Rosneft. The move forced Nayara to approach the Delhi High court for restoration of its services. And now on 12th of August 2025, one of India’s largest bank and lender, State Bank of India (SBI) has ceased processing of  Nayara’s overseas trade and foreign-currency transactions as a precaution against potential U.S. and EU sanctions allegedl without any instruction from the union. This potrays how the big tech and corporate is used as a leverage tool in enforcement of foreign policy agendas.

2. Then on 28th of July, the Delhi High court issued notice to Microsoft while hearing a petition under section 9 of Arbitration and Concilation act filed by Nayara Energy seeking an interim injunction and the immediate restoration of services critical to its operations. It alleged that the suspension was arbitrary, abrupt, without any notice and in violation of Microsoft Business Service Agreement (MBSA). It was further contended by Nayara that sanctions imposed by the European Union should and have no legal applicability in India and such an action is barred both under Indian and American law. It further described Microsoft’s suspension as a sign of corporate overreach. Nayara Energy further drew the court's attention to the fact the such a suspension increases potential risks to India’s critical energy infrastructure development programme. 

3. In a recent statement issued by Nayara Energy on 12th of August, it was further confirmed that the State Bank of India has also ceased operations and transactions of the company. Nayara has contended that this action was taken without any statutory backing, regulatory directive, or judicial order, making it arbitrary and ultra vires. It is argued that under Indian banking law, including the Banking Regulation Act, 1949, and the Foreign Exchange Management Act, 1999, a bank cannot unilaterally suspend lawful transactions of a customer unless expressly mandated by a competent authority.  It is unfortunate that the SBI suspension comes at a time when Nayara was begginignt to get back at its feet from the disruption it felt during the Microsoft fiasco. However, this move is likely to severely impede the company’s ability to fulfil its supply chain obligations, execute crude procurement contracts, and honour export commitments, despite no legal directive mandating such suspension. 

4. Such a playbook is not new and has been seen before when in 2019, the US imposed sacntions on Huawei, which was soon followedy by Google revoking Huawei’s android access to its update and new features which crippled the operations of its devices and caused a massive glitch across the world. Similarly, in 2022, pursuant to the Russian invasion of Ukraine, western payment giants suspended its services and operations in Russia and its controlled regions. It was estimated then that russia was losing over a billion dollars in revenue from the card operators annually. But it actually turned out to be a blessing in disguise. Prior to the suspension of Mastercard and Visa, the domestic card market of Russia was less than 70% which later grew exponentially as a result of the suspension. The same thing was seen with Huawei when they started developing their own UI and voluntarily stopped relying on google in the future which repoerteldy costed google billions of dollars in business. 

   

5. This pattern of states leveraging multinational corporations to enforce foreign policy blurs the line between the rule of law and geopolitical coercion. However, just as China and Russia turned adversity into opportunities, Indiaz can too chart an independent course. Today, India already has domestic and homegrown brands such as Zoho which offer better suite and cloud services at a better price while being tailored to the domestic needs. The current episode should be seen as a silver lining in the dark clouds to stop reliance on foreign tech monopolies and foster homegrown solutions and markets and be a self-reliant digital india.