Data Localisation Issue | Latest Burning Issues

Table of Contents

WHAT HAPPENED RECENTLY?

A last-minute effort to dilute the Reserve Bank of India (RBI) directive on Data Localisation by American global payment companies has triggered direct intervention by US lawmakers urging Prime Minister Narendra Modi to soften tough stand taken by the country’s monetary authority.

Data localisation is the act of storing data on any device that is physically present within the borders of a particular country where the data is generated.

POLICY GOALS

Goals set in the Draft National Digital Communications Policy 2018, along with various government notifications and guidelines such as Reserve Bank of India’s notification on Payment Data Storage 2018, and the Guidelines for Government Departments for Contractual Terms related to Cloud Storage 2017, show signs of data localisation.

WHAT US SENATORS ARE SAYING

The senators have warned India of business and security implications. Americans companies have argued that whey they adopt high-quality privacy safeguards, the location of data has no bearing on whether the data is secure. They allege that forced data localisation requirements create inefficiencies for both businesses and consumers, raising the cost of procuring and delivering data services, including those that local Indian businesses utilize on a daily basis.

TRUMP MIGHT INTERVENE

The US companies want Donald Trump administration to put pressure on Indian authorities in a bid to seek relaxation on the RBI order of ensuring implementation of data localisation by 15 October.

US companies have been lobbying with the Finance Ministry and the RBI over the issue.

REASON

The rationale behind such mandates has been attributed to various factors, such as: securing citizen’s data, data privacy, data sovereignty, national security, and economic development of the country. The extensive data collection by technology companies, due to their unfettered access and control of user data, has allowed them to freely process and monetise Indian users’ data outside the country.

WHY TECHNOLOGY FIRMS ARE WORRIED?

Stricter localisation norms would help India get easier access to data when conducting investigations, but critics say it could lead to increased government demands for data access. Technology firms worry the mandate would hurt their planned investments by raising costs related to setting up new local data centres.

INDIA’S AMBITIONS

India also aspires to become a global hub for, among others, cloud computing, data hosting and international data centres, all of which are prompting the government to enact data localisation requirements for accelerating the nation’s economic growth, especially in the sphere of digital technologies.