The economic consequences of war are often measured through damaged infrastructure, disrupted trade routes, As geopolitical tensions rise in areas like the Middle East, the topic of conversation usually moves to oil prices, shipping lanes, inflation, and potential trade disruptions. The buildup to the recent events over the Strait of Hormuz and the Red Sea was no different. The impact of this agreement on energy markets and maritime trade was closely watched by policymakers, businesses, and analysts, as the region plays a crucial role in global trade.

Under these waters, however, exists another type of infrastructure that, although less studied, is increasingly relevant from an economic point of view.

Undersea fibre optic cables run across the ocean and connect nearly 99 per cent of internet traffic between countries. These cables are used for various types of financial transactions, cloud computing, digital payments, software exports, video conferencing, and communicating between businesses on different continents.

The flow of energy and material resources is thus no longer the only economic impact of modern conflicts. They are driving governments and companies to rethink resilience of digital infrastructure in increasing numbers. This trend is significant for India, where its growth is increasingly tied with the information technology services industry, digital payments, cloud computing, and industries that rely on data.

Changing definition of strategic infrastructure Strategic infrastructure was usually defined as ports, railways, highways, pipelines, power grids, and other infrastructure before. These allowed goods, energy and people to be transported, and were vital to economic activity. As a result, wars frequently threatened to wreak havoc on these assets, either by direct means of damage or by blocking trade and transportation. This has been enhanced by the digital economy. This has been reinforced by the digital global economy.

Nowadays data is a vital economic asset. Bills of billions are exchanged in financial markets on a daily basis via digital networks. More and more, businesses are turning to the cloud. Governments provide a range of public services online and consumers are conducting online commerce and payments on an unprecedented scale.

Consequently, the infrastructure that supports such activities has also become vital.

The core of this system are undersea cables. They are mostly unseen to the public but they link continents and allow the smooth transfer of information that underpins today’s economic activity. The extent of this infrastructure is representative of its importance.

Strategic Importance of Global Submarine Cable Infrastructure

The clustering of a number of cable systems in strategic maritime areas has drawn attention to their economic importance. Cable disruptions can be caused by fishing activity, ship anchors or natural events, but recent geopolitical tensions have brought the significance of safeguarding digital infrastructure to the fore.

Lessons from Recent Conflicts:

Modern conflicts have come with a lot of implications and one of the most striking of them is that there has been a reconsideration of infrastructure risk. The debate on economic resilience has traditionally centered on energy security and on the physical supply chain. Throughout the COVID-19 pandemic, the risks of vulnerabilities on the supply chain have been accentuated, and in today’s context of geopolitical tensions, energy dependence has been brought to the fore.

The Middle East, and disruption in the Red Sea, has brought the discussion of digital infrastructure more into the mainstream more recently. The waters are traversed by several submarine cable systems, linking Europe, Asia and the Gulf region. The disruption of these critical sea lanes may impact global connectivity and operational difficulties for companies relying on instant communication and data transfer.Any disruption to these vital sea lanes could have implications for the global connectivity and operational challenges for businesses that depend on real-time communication and data transmission. Importantly, the economic importance of these concerns is not limited to countries that are directly engaged in conflict.

Digital networks are an integral part of modern economies. Therefore, connectivity infrastructure developments have a potential impact on financial markets, cloud services, international business operations and digital trade in several regions at once. This has led to a greater understanding of the need to consider digital infrastructure from the perspective of economic resilience. India needs to understand the importance of this for its own growth. In India, the importance of this is in the country’s booming digital economy. India is one of the biggest suppliers of information technology and business services in the world in the last ten years.

 At the same time, the nation has seen a staggering rise in digital payments, cloud computing, data centres and internet users. The developments have paved the way for India’s greater connectivity with the digital networks of the world and have made the need for good connectivity with the world more important. There are a number of indicators for this transformation.

India’s Economic Exposure to International Data Connectivity:

The numbers reflect India’s growing economic growth being tied to sectors which are highly data-intensive. Digital services are unlike manufacturing exports and can be in constant communication and require real-time connectivity.

This does not mean that the India is facing immediate threats from each and every geopolitical event. Instead, it stresses the changing nature of the economy. Digital sectors are becoming increasingly vital to employment, exports, innovation and productivity, and the infrastructure that supports these sectors gain in strategic significance.

Mapping the Digital Arteries of the Global Economy:

The strategic significance of undersea cables becomes clearer when viewed geographically. A substantial share of the world’s submarine cable network passes through a limited number of maritime corridors, including the Strait of Hormuz, the Red Sea, and the wider Middle East region. These routes not only facilitate international communication but also support financial transactions, cloud computing, digital trade, and information technology services across continents.

What Alternatives Are There If Subsea Cables Falter?

While potential damage to subsea cables would not cause a complete connectivity loss — due to land-based links — experts agree that satellite systems are not a feasible replacement, as they cannot handle the same volume of traffic ⁠and are more ​expensive.

“It’s not as though you could just switch to satellite. That’s not an alternative,” Mauldin said, noting that ​satellites rely on connections to land-based networks and are better suited for things in motion, like airplanes and ships.

Low-Earth-orbit networks such as Starlink are “a boutique solution, which is not scalable to millions of users, at this time,” Kotkin added.

Sectoral Implications for the Indian Economy:

The IT industry is the most obvious illustration of this dependency. Indian companies provide software development, consulting, cybersecurity, engineering services and business process management solutions to clients worldwide. Efficient provision of these services requires international connectivity.

Finance services are no exception. Today’s banking systems rely on the exchange of information in real-time. Secure communication networks are vital for cross-border payments, investment flows, foreign exchange transactions and digital banking services. India’s financial ecosystem is going increasingly global and digital infrastructure is playing an important part in terms of financial resilience.

Another emerging area is cloud computing and data centres. Companies are increasingly moving operations to the cloud, where data needs to be shared continuously via international networks. Therefore, the growing data-centre industry in India not only needs to have local infrastructure but also good connectivity with the world. Other companies, such as the ecommerce, digital payment services, telecommunications and emerging tech companies, also rely on the availability of secure and effective global communication networks. Collectively, these sectors contribute significantly to economic activity and employment generation.

The importance of these sectors illustrates why digital infrastructure is increasingly viewed as an economic asset rather than merely a telecommunications utility.

The Emerging Focus on Digital Resilience:

 A change in attitude, a shift in mindset, perhaps the biggest after-effect of recent conflicts is not physical damage to infrastructure but a wider rethinking of the concept of resilience by government and businesses alike. Until the last few decades, fuel reserves, transportation networks and supply chains were the main indicators of resilience. These days, they often involve cybersecurity systems, cloud infrastructure, data centres, and submarine cable networks. Redundancy is on the agenda and alternative connections are being put in place.

Governments are enhancing monitoring and including digital infrastructure in their wider economic planning processes. The goal is not to eradicate or eliminate all risk but to minimize vulnerabilities and create continuity in a hyper-connected economy. This development is aligned with the overall initiatives taken by India to enhance the digital infrastructure and ensure sustainable economic development. Connectivity infrastructure will play a growing role in enabling innovation and competitiveness as sectors like artificial intelligence, cloud computing, fintech and digital commerce grow.

Yesterday’s conflicts have a lasting impact on oil markets, shipping lanes, and traditional supply chains. They also are changing the perception of what is strategic economic infrastructure. The undersea cables, formerly considered only as a telecommunication asset, are now known as an important part of the digital economy. While conflict is not the most relevant aspect of this development for India, the increasing significance of digital connectivity to economic activity does become relevant.

Growth is increasingly dependent on technology services, digital payment, cloud computing and data driven industries and digital infrastructure is becoming a larger economic consideration.

As data flows are as crucial as trade flows, geopolitical tensions during the past few years have thus provided a valuable reminder: the networks under the oceans are as vital to economic resilience as the routes over them.