Question – The Indian data Localisation wave is the latest digital battleground of ongoing power wars between government and industry. As the world weighs free global data flow against national security, what subjects will we be at stake with this?

Question – The Indian data Localisation wave is the latest digital battleground of ongoing power wars between government and industry. As the world weighs free global data flow against national security, what subjects will we be at stake with this? – 10 September 2021

Answer

Data localisation refers to storing data in any device that is physically present within the boundaries of a specific country (where the data was created). In India’s perspective, much of this data is stored in a cloud outside India. Therefore, following the recommendations of the BN Srikrishna Committee by RBI in the year 2018, all system providers were advised to store all data relating to payment systems operated by them only in systems located in India.

Importance of Data Localisation for India:

  • Digital data in India was 40,000 petabytes in 2010, which is expected to reach the level of 2.3 million petabytes by 2020. It is growing at 2 times faster than the global rate. If India retains all this data, it will become the second largest investor in the data center market and the 5th largest data center market by 2050.
  • “Data is the new emerging field” (data is the new oil – just as oil was once a vital resource, data is currently emerging as a vital resource) which makes it important to collect data in a localized form. In the region of the largest open Internet market in the world, national wealth creation depends on in-house data storage.
  • Government’s commitment to protect citizen data, data privacy, data sovereignty, national security and economic development of the country.
  • Extensive data collection by technology companies has allowed them to process and monetize the data of Indian users outside the country. Therefore, to reduce the dangers of irregular and arbitrary use of personal data, data localisation is essential.
  • Data localisation is an opportunity for Indian technology companies to develop an approach from services to products. International companies also keep an eye on the Indian market and this will benefit the development of the local environment.

Needs:

  • Data localisation needs to integrate a wide range of social, political and economic perspectives.
  • There is an urgent need for an integrated, long-term strategy for policy making for data localisation.
  • There will be a need to create an optimal regulatory and legislative framework for data processors and data centers operating in the country.
  • Adequate infrastructure in terms of energy, real estate and internet connectivity is also essential for India’s data centers to become a global hub.
  • The interests of India’s Information Technology Enabled Services (ITES) and Business Process Outsourcing (BPO) industries require adequate attention, which are proficient in cross-border data flow.

Concerns / Challenges:

  • Critics believe that the concept of data localisation is contrary to the concept of globalization and promotes protectionism.
  • Experts believe that if all countries start emphasizing on the security of data, then it can be very harmful for companies in India who are interested in global expansion.
  • While India and China are in favor of data localisation, the US government and companies are considering the need for seamless data flow.
  • Development will be restricted if the data cannot be stored internationally. India lacks infrastructure for efficient data collection and management.
  • Having data in India does not mean that domestic companies will be able to access this data Localisation can aid the growth of the data center and cloud computing industry in India, but such an approach is only conducive to broader public policy.

In this direction, the National Digital Communications Policy 2018, and The guidelines for government departments on contractual terms related to cloud services, Draft E-commerce Policy and Draft Report of Cloud Policy Panel show signs of data localisation. Simultaneously, the Reserve Bank of India has issued a strict data localisation order on payment system providers collecting payment system data only in India.

As a solution, policy makers should believe in the transformative power of Indian entrepreneurs to succeed globally and try to involve these entrepreneurs in the decision-making process regarding privacy and data flow. In addition, some provisions of the EU’s data transfer model and the CLOUD Act should also be included.

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