Data localisation row: It's Big Tech vs Reliance Industries and Paytm

RIL, Paytm support localisation; global tech firms say it could have socioeconomic fallouts

Serious differences have arisen between domestic companies such as Reliance Industries Ltd and Paytm, and global tech and media companies such as Google, Meta, Disney+Hotstar and others, on the contentious issue of data localisation in the proposed Data Protection Bill.  

In a meeting of the public policy committee of the Internet and Mobile Association of India (IAMAI) on Wednesday, domestic players favouring data localisation pointed out that the mandate of the joint parliamentary committee (JPC) on the bill is not at all stringent as it has given two years to put the infrastructure in place.  They added that some members were taking national security concerns lightly, which they could not agree with.     

They said, moreover, that data localisation in China has proved to be a good use-case, and has had no tangible adverse impact.  

Paytm has argued that while localisation of data may increase the compliance burden, if companies want to run businesses in India they should put up with that.

It also believes that there is no empirical evidence to show data localisation has a big impact in the payments sector.  

Neither Reliance nor Paytm commented on the issue.  

However, global companies have opposed the move. An online search engine company has said that there is real socio-economic value in facilitating cross-border data flows, according to research by bodies like the Indian Council of Research on International Economic Relations and CUTS International. 

They have pointed out that data flow will support innovation and startups in different sectors.   

Global companies have also argued that the move could lead to socio-economic consequences and have fallouts in bilateral trade agreements . 

A senior executive of a global company who was represented in the discussions said: "What constitutes critical personal data where data storage has to be in India has still not been defined. On critical personal data, the definition is so expansive that anything including an uploaded photo can come under it."  

Some global players have said that if similar rules are imposed in SAARC countries, it would be problematic . Google and Meta declined to comment on the issue.  

However, in its earlier representation, the IAMAI had opined that stringent data localisation should not be included in the Bill and demanded the removal of criminal penalties. The association had also raised objections to the JPC including non-personal data within the ambit of the Bill which was contrary to the recommendations of the expert committee appointed by the Ministry of Electronics and Information Technology (MEITY) to develop a framework for non-personal data governance.
 
Other stakeholders have questioned the rationale for domestic companies raising the issue of national security. The CEO of a leading global tech company said: “The issue of national security is something the government has to deal with. It is unfair to ask the private sector to do that.”