Microsoft to enable in-country data processing for 15 nations by 2026, including India

Microsoft will allow Microsoft 365 Copilot interactions to be processed locally in 15 countries by 2026, including India. The move enhances data security, sovereignty, and compliance for governments and regulated industries, following recent legal and operational updates in India

New Delhi: Technology giant Microsoft has announced plans to introduce in-country data processing for its artificial intelligence (AI) tool, Microsoft 365 Copilot, in 15 countries by 2026, including India, in a move aimed at strengthening data sovereignty and regulatory compliance.

According to a company blog post, customers in India, Australia, Japan and the United Kingdom will have the option to process Microsoft 365 Copilot interactions within their national borders by the end of 2025.

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“Microsoft is pleased to announce that we are making in-country data processing for customers’ Microsoft 365 Copilot interactions available in 15 countries around the world. By the end of 2025, Microsoft will offer customers in four countries—Australia, the United Kingdom, India, and Japan—the option to have Microsoft 365 Copilot interactions processed in-country.

“In 2026, we’ll expand this option to customers in eleven more countries, including Canada, Germany, Italy, Malaysia, Poland, South Africa, Spain, Sweden, Switzerland, the United Arab Emirates, and the United States,” Microsoft said.

The announcement is part of Microsoft’s ongoing efforts to enhance governance, security and performance for government bodies and highly regulated industries by ensuring user data is processed and stored locally.

With in-country processing, Copilot interactions — including prompts and responses hosted on Azure OpenAI models — will be handled within local data centres during normal operations.

Microsoft said the initiative builds upon its existing investments in data residency. The company currently offers in-country data residency for Microsoft 365 and Copilot customers in 27 nations, as well as in-region data residency and processing for countries within the European Union (EU) Data Boundary.

The expanded sovereign controls follow Microsoft’s compliance framework revamp, rolled out weeks after a legal dispute with Nayara Energy earlier this year.

In July, when the European Union sanctioned India-based Nayara Energy for its Russian links, Microsoft Corp – apparently following a set protocol – stopped providing email and other services, prompting the refiner to sue the tech giant in the Delhi High Court. It restored the services before the court heard the matter.

To prevent a recurrence of such incidents, Microsoft last month unveiled updated review protocols, jurisdictional safeguards, and transparency measures as part of its compliance overhaul tailored for India.

The company had also set up a Public Sector and Critical Infrastructure Customer Council, chaired by Microsoft India and South Asia President Puneet Chandok, to engage with sectors such as energy, healthcare, and financial services.