DNA Edit: Stick your ground – India must protect its interests on data localisation

Indo-US relations have rarely been so sweet tempered as in the last few years. Prime Minister Narendra Modi has helped to build on a foundation provided by Manmohan Singh, upping ties between the world’s two biggest democracies. Every now and then though, there are glitches and the one gathering pace right now, has the potential to damage a smooth sailing relationship. In a letter this month to Modi, two influential US Senators John Cornyn and Mark Warner, both co-chairs of the Senate India Caucuses to boot, have opposed the data localisation requirement of the Indian government. 

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. In an April circular, the RBI said all system providers will have to ensure that the entire data relating to payment systems operated by them are stored in a system only in India. It has given time till October 15 to comply with the mandate. American anxiety in this case is understandable. Companies like Mastercard and Visa dominate most of the world outside of the Chinese financial system, and are also known not to share sensitive data they have at their command. The proposed draft data protection bill and the draft national e-commerce policy framework, which powers Indian data localisation, will compel them to do. 

In typical American-speak, 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. To induce just the necessary scare - given that the two countries share a lot of information on sensitive issues like intelligence - the Americans have warned that it could also be counterproductive when it comes to India modernising its framework regarding law enforcement requests for data.  

American financial companies are believed to have approached the administration against the RBI directive, which requires them to store in India any payment-related data from transactions that take place inside the country. India has rejected their request. To be sure, this issue is not new for the Americans. Officials in Washington have traditionally held that Chinese companies ZTE, Huawei Technologies Co Ltd and other local firms are beholden to the Chinese government. It is important therefore that India stands its ground, as this government has done. While improving bilateral relations are important, they should not come at the cost of a country’s sovereignty and self-interest.