India generates the data. SpaceX processes it. The returns flow to Nasdaq shareholders. This is not a partnership. It is an extraction model with better optics
FUTURECRAFT | TECHNOLOGY & MARKETS
ARSSH KUMAR
India spent the better part of a decade arguing about where to put its data. The Digital Personal Data Protection Act, passed in 2023 and brought into force in late 2025, is the culmination of that argument. The answer it arrived at: data generated by Indian citizens must remain answerable to Indian law, wherever it travels. The framework assumes data travels between countries. It does not account for data that orbits above them.
On January 30, 2026, SpaceX filed an application with the US Federal Communications Commission to launch up to one million satellites as an orbital data centre network. The FCC formally accepted the filing on February 4. The system would process AI workloads in low Earth orbit, between 500 and 2,000 kilometres above the surface, powered by solar energy, interconnected by laser links, and routed back to ground stations through the existing Starlink constellation. SpaceX expects to begin deploying the first of these satellites as early as 2028.
Two weeks before the FCC filing, SpaceX filed its IPO prospectus on Nasdaq, targeting a valuation of up to $2 trillion — the largest public offering in history. The company that wants to process the world’s data from orbit is about to become the world’s most valuable publicly listed company. For India, the timing is not incidental. It is the problem.
The Law Ends at the Atmosphere
India’s data sovereignty framework rests on a territorial assumption. The DPDP Act has explicit extraterritorial reach — it applies to any entity processing Indian personal data anywhere in the world. But extraterritorial reach and extraterritorial enforcement are different things. Under the Outer Space Treaty of 1967, still the foundational document of space law, any spacecraft is governed by the laws of the country that launched or registered it. An orbital data centre operated by a US company is, legally, US territory. Indian regulators cannot compel operational decisions on hardware flying 550 kilometres above the subcontinent.
The jurisdictional gap is not hypothetical. Legal analysis from Foley Hoag published in December 2025 identified the core problem: existing data protection regimes assume data has a physical location within a state’s borders. Orbital infrastructure breaks that assumption. A data centre in low Earth orbit passes over India, China, the EU, and the United States in a single orbit. Whose rules apply is not a settled question. It is a power struggle dressed in legal language.
For countries like India, that power struggle is already lost. Without shared governance or co-ownership, orbital compute risks turning developing countries into data suppliers while control and value remain concentrated in the US. India generates the data. SpaceX processes it. The returns flow to Nasdaq shareholders.
The Sovereignty Infrastructure India Built for Ground
India has spent significant political capital building a terrestrial data sovereignty framework. The DPDP Act’s blacklist mechanism lets the central government restrict data transfers to specific countries. The Reserve Bank of India mandates local storage for payment data. TRAI has pushed for telecom data to remain on Indian servers. These are serious policy instruments built on a serious assumption: that data infrastructure has an address.
SpaceX’s orbital system has no address. It has a registration — with the FCC, under US law. The orbital shells SpaceX proposes to use are in international space. No nation can claim them. But SpaceX can operate in them, and the governance framework it answers to is American.
This is not a problem India can negotiate around bilaterally. The Outer Space Treaty has 114 state parties. Amending it requires consensus that does not exist. India’s DPDP enforcement machinery — its Data Protection Board, its penalty regime, its government notification powers — was designed for a world where data centres occupy land that sovereign states control. That world is ending faster than the regulations.
The Starlink Entry Point
The orbital data centre question is not abstract for India because Starlink is not abstract for India. SpaceX has been building ten satellite gateways on Indian soil and running government security clearance tests ahead of a commercial launch that could come within this calendar year. TRAI and the Department of Telecommunications have spent months debating pricing and spectrum. India is actively negotiating the terms under which a SpaceX ground network enters its territory.
That negotiation is happening with a private company. When SpaceX lists on Nasdaq at close to $2 trillion, it will be happening with the world’s most valuable public entity, one with 85% of voting rights concentrated in Elon Musk’s hands under a super-voting share structure, and a fiduciary obligation to maximise returns for retail shareholders across 30% of its float. The counterparty India is used to dealing with does not survive the IPO. The leverage calculus shifts.
Takshashila Institution’s April 2026 analysis of Starlink risks made the operational stakes explicit: in a scenario where US strategic interests require it, Washington could pressure SpaceX to share data from Indian operations, maintain or deny coverage over specific regions, or act in ways that serve American rather than Indian interests. Musk himself said in 2025 that Starlink is the backbone of the Ukrainian front line and would collapse without him. India is inviting that same network to run ground infrastructure for 1.4 billion people, while its parent company builds the capacity to process data from orbit beyond the reach of any Indian regulator.
The Honest Counter
There is a real argument on the other side. Orbital data centres could ease pressure on India’s strained terrestrial power grid. The economics of solar-powered satellite compute — no cooling costs, no land acquisition, near-constant energy — could make AI inference substantially cheaper for Indian developers and startups. The IndiaAI Mission’s subsidised GPU-hours would matter less if inference costs fall across the board. Cheaper compute is not nothing.
The counter also holds that the Outer Space Treaty framework still makes SpaceX legally responsible to the US government for its orbital operations — and the US-India relationship is not adversarial in the way a Chinese-operated orbital data centre would be. India is a Quad partner. The risks are real, but they operate within a diplomatic relationship that has structural interests in India’s stability.
That argument would be more reassuring if Starlink had not updated its global privacy policy in January 2026 to permit the use of customer data, including location information, weeks before its India security clearance tests began.
Bottom Line
India’s digital sovereignty framework was designed for a world that is being dismantled from above. The DPDP Act assumes data can be localised. The Outer Space Treaty assumes spacecraft answer to their launching state. SpaceX is about to become the world’s most valuable listed company on the back of a business that sits at the intersection of both frameworks and is constrained by neither. India is negotiating Starlink’s ground access while a company that wants to own the sky above it prepares to go public. The terms of that negotiation deserve more scrutiny than they are getting. Once the IPO closes, the leverage to apply it largely disappears.
(The author studies Computer Science and Artificial Intelligence at Rutgers University, New Jersey, USA. He is interested in emerging technologies and innovation, and can be reached on LinkedIn at @arssh-kumar14)