Google's digitisation drive

Fix legal issues to attract more investment

Google has announced an India-specific war chest of $10 billion, to be invested over five to seven years. The money will fund equity investment and partnerships to “accelerate digitisation”. Google thus joins Facebook, Qualcomm, sovereign funds, and sundry venture capital and private equity firms in focusing on India’s tech sector, which has become an attractive bet. Jio Platforms, an unlisted subsidiary of Reliance Industries, has been the biggest beneficiary, picking up more than $15 billion worth of investment over the past four months. There is speculation that Google may invest $4 billion to buy into Jio, which is seen as a potential one-stop shop with Reliance leveraging its dominance of telecom to carve out market share in entertainment, retail, social media, video conferencing, instant messaging, and fintech. However, there is money pouring into many other start-ups, and into India’s second-largest telecom services provider, Airtel.

This is due to the convergence of several factors. One is that the pandemic with attendant lockdowns and work-from-home paradigms have led to a rise in the number of hours spent online and widened the scope of digital service delivery across new domains. Another factor is a perceived vacuum in the Indian digital space due to the banning of popular Chinese apps such as TikTok. Entrepreneurs are rushing to fill that gap with new apps with similar functionalities. Demography is also a factor. India has a young population and the second-largest mobile broadband subscriber base. Indians are, by far, the largest data consumers per capita and e-commerce is growing quickly despite policy bottlenecks. Data consumption has risen during the pandemic and is expected to continue rising steeply.

There are concerns, however, that poor policy-making and tardy legislation might hobble this huge market and prevent its organic development to full potential. Policymakers have been inconsistent in setting up safeguards for data privacy for citizens. Some of the policy demands being made of digital businesses also appear unrealistic. At one level, a basket of 59 Chinese apps has been banned recently because of security issues. The government is also formulating policy that insists on the private and personal data of Indian citizens being held and processed on servers within the nation. However, India doesn’t have a personal data protection law yet, which means data stored on Indian servers are in a legal grey area where they could be open to misuse without legal redress.

The draft legislation has been pending since 2018, when the B N Srikrishna Committee submitted it, and has been amended by a Parliamentary committee. The new draft has no safeguards against blanket surveillance by government agencies. In addition, the government is pushing for complete access to non-personal data, which means the commercial secrets of businesses would be at risk. It would also like access to source codes of telecom equipment, including mobile devices, and has reportedly asked for social media data to be stored on local servers and deciphered on demand, breaking end-to-end encryption. These demands might retard the development of this huge market and put citizens’ privacy at risk. Therefore, the government should get the data protection law passed with adequate protection. A more robust legal framework will increase activity in the sector and attract investment.