The implementation of the Digital Personal Data Protection (DPDP) rules is expected to drive a sharp rise in technology and compliance spending across enterprises, with industry estimates indicating a 10–30% increase in IT and tech budgets, depending on organisational scale and data maturity.
Following the government’s notification of the rules, companies have a transition window of about 12–18 months to rework their systems to meet new requirements. This includes redesigning consent and notice mechanisms, updating data-retention procedures, preparing for mandatory breach reporting and enabling user-rights features. The overhaul is expected to influence legal, operational and technology functions simultaneously, leading to a broad-based rise in compliance costs.
“Enterprises now have a clear direction on how personal data must be collected, processed and governed. The phased rollout gives organisations time to build privacy into operations, but obligations are fixed and will increase compliance-related costs, not just on technology, but also on legal and operational fronts,” Murali Rao, partner and leader, cybersecurity consulting, EY India, told FE.
Redesigning systems for compliance
Technology upgrades represent the most significant component of the shift. Companies are now assessing requirements spanning data consolidation, consent-management tooling, tightened security frameworks and changes to back-end architecture. These interventions may trigger overhauls in IT systems, particularly for firms with fragmented data environments.
Why SMEs face a 30% budget hike
“For small and medium enterprises, tech spending could rise by nearly 25-30%, or even more if their architecture needs rebuilding. Larger organisations may already have mature systems, but even they are likely to incur a 10-15% increase,” Chetan Jain, founder and managing director, Inspira Enterprises, said. A substantial portion of this spending will be directed towards external cyber and data-security service providers, he added, especially for businesses lacking dedicated internal teams.
Mapping data across in-house systems, vendor partners and third-party associates is one of the first and most resource-intensive tasks, he explained.
Data audits, a practice largely absent in India until now, are emerging as another line item. “With the DPDP rules, structured data audits become a recurring requirement and add to the overall cost of compliance. Smaller firms could see tech budgets rise by over 30% as many will be building systems from scratch,” Faisal Kawoosa, founder and chief analyst, Techarc, said.
Legal and regulatory spending is also expected to climb. For startups, compliance preparedness is increasingly linked to investor interest and enterprise contract wins. “Early-stage startups are now allocating 15–20% of their legal budgets to DPDP readiness, mainly for privacy-policy design, consent frameworks and data-processing agreements. For growth-stage startups selling to large enterprises, that share rises to 25–30% because compliance is becoming a deal-breaker in sales cycles,” said Prachi Shrivastava, founder, Lawfinity Solutions and Vakil Vetted.
While companies anticipate substantial transition expenses in the short term, according to consultants the shift could eventually reduce the risk of disputes and data breaches by streamlining privacy practices.