India needs to pay greater attention to South Asia’s digital transformation as part of its regional strategy. Digital infrastructure is no longer simply an economic or developmental issue. As telecommunications networks, cloud infrastructure, data centres and digital platforms become integrated into government services and critical infrastructure, decisions about vendors, standards and data governance have long-term implications for national and regional resilience. For New Delhi, working with Australia and other like-minded partners to provide credible choice, strengthen regional capacity and promote secure, trusted and interoperable digital ecosystems offers a practical path forward.
Across South Asia, governments are investing in telecommunications networks, data centres, digital public infrastructure, smart cities and digital services to accelerate economic growth and improve public service delivery. Yet persistent shortfalls in connectivity infrastructure, institutional capacity and regulatory frameworks continue to constrain these ambitions. Capitalising on this opportunity over the past decade, Chinese companies have established a significant presence across South Asia’s digital ecosystem. They have been suppliers of everything from mobile phones and telecommunications equipment to fibre-optic networks and submarine cables, data centres, cloud services, surveillance technologies, digital payments and e-commerce.
China’s growing presence in its neighbourhood has raised concerns in India about strategic encirclement, economic dependency and security vulnerabilities. The issue is not Chinese involvement in South Asia’s digital development in itself. The key challenge is the combination of China’s growing presence, limited alternatives and weak institutional capacity in recipient states. Chinese companies offer competitive pricing, state-backed financing and strong project delivery, making them attractive partners for governments facing resource constraints. While this engagement has helped address infrastructural gaps and accelerate digital connectivity, it comes with risks and challenges that demand urgent attention.
Once embedded, dependence on a limited number of suppliers can create technological lock-in – both in technical standards and for hardware repairs – making future diversification more difficult, threatening operational control and ultimately undermining digital sovereignty. Unsustainable financing, lack of transparency, weak cybersecurity and inadequate data privacy laws are other key challenges. Further, China’s presence extends beyond physical infrastructure in strategic locations. It also encompasses e-governance, education and training, e-commerce, and digital payments. Technical standards and governance practices are also being promoted through bundling with large infrastructure projects, professional training and diplomatic engagement. China’s digital footprint thus has the potential to shape not only the infrastructure of regional digital economies but also their governance.
India cannot replicate this approach of a vertically integrated digital ecosystem that spans telecommunications hardware, cloud services, digital platforms, financing and implementation capacity. Previous regional connectivity efforts have also faced challenges, including concerns among smaller states about India’s dominant position and lack of timely delivery. However, India has important strengths to draw upon. Its experience in deploying digital public infrastructure at scale, including its Aadhaar digital identity system and UPI instant-payments network, shows how secure, affordable and interoperable digital systems can improve financial inclusion, service delivery and administrative efficiency. India is also pursuing technological and digital cooperation with the aim of leveraging its diplomatic strengths, large population and market power to contribute to a more open and democratic technological order.
For India, playing on its strengths in key sectors while cooperating with like-minded partners is important to overcome resource constraints and build greater trust and political support. Australia, with its strategic focus on an open and democratic Indo-Pacific, is well placed to complement India here. Australia has expertise in e-governance, cybersecurity, infrastructure financing, institutional capacity building and regulatory cooperation. Together, they can help address some of the challenges that have emerged from China’s rapid expansion. The objective should not be an unrealistic effort to detach the region from Chinese technology. Instead, the priority should be to expand the choices available to South Asian governments and enable them to pursue digital transformation on terms that reflect their own development priorities.
There are already practical ways to do this, but using these existing frameworks will require both political will and long-term funding. Australia’s South Asia Regional Infrastructure Connectivity initiative could incorporate digital infrastructure alongside transport and energy, supporting international financing for investment in terrestrial fibre networks and resilient e-governance infrastructure. Australia has experience in facilitating finance and project preparation. This combined with India’s experience with large-scale and cost-effective digital solutions and regional developmental projects could create viable alternatives in the region.
The Partnership on Cyber, Critical Technologies and Supply Chains also provides an institutional basis for expanding cooperation. A dedicated India–Australia digital dialogue between political leadership, government officials, experts and observants from partner countries in South Asia will encourage knowledge sharing and a greater understanding between the two countries. Cooperation on digital public infrastructure, cybersecurity exercises, governance best practices, human capital development and private sector investment could further strengthen institutional resilience in the region.
Leave a comment