Data localisation: Why RBI may ease storage norms for foreign firms

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Updated: June 19, 2019 6:49:15 AM

The RBI had last year stipulated that global payment companies will have to store transaction data of Indian customers within India.

Data localisation, foreign firms, RBI, industry news, American Express, Amazon, Flipkart, Google, Facebook, Microsoft, RBI newsData localisation: Let-up for foreign firms? Why RBI may ease storage norms

The government on Tuesday said concerns raised by technology players on rules to store data locally will be examined, offering a fresh ray of hope to foreign companies like Mastercard and American Express that had lobbied against the stipulation. Even the US government had expressed its concerns on India’s mandatory data localisation rule.

The official statement comes after a stakeholders’ meeting on e-commerce and data storage policies on Monday, chaired by commerce and industry minister Piyush Goyal and attended by top government and RBI officials and representatives of leading companies, including Amazon, Flipkart, Google, Facebook, Microsoft and American Express.

“All the companies who were represented in this meeting put forth their concerns related to RBI data storage requirements and processing related guidelines issued by the RBI. Deputy governor of RBI, BP Kanungo, assured the industry representatives that the Reserve Bank of India will look into this,” the commerce ministry said in a statement.

The RBI had last year stipulated that global payment companies will have to store transaction data of Indian customers within India. Separately, the government has also drafted an overarching law on data storage, which calls for all personal data determined to be critical to be processed locally. The government will be the one to determine categories of such data.

Mastercard CEO Ajay Banga had joined Monday’s meeting via video conference, while American Express representative was present in it.

The move to examine the data rules comes at a time when trade tussles between India and US have risen. India on Sunday imposed retaliatory tariff against 28 American goods in response to the Trump administration’s move last year to slap extra duties on steel and aluminium, having held back the tit-for-tat action for close to a year hoping to clinch an elusive trade deal. New Delhi’s action followed Washington’s withdrawal of duty-free trade incentives worth $190 million a year for New Delhi from June 5.

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At Monday’s meeting, industry representatives also informed Goyal that the consultations for the Data Protection Bill by MeitY was “satisfactory but as a lot of time had elapsed and the industry was not sure about the final shape of the Bill”. “Secretary MeitY, Ajay Prakash Sawhney, assured the e-Commerce companies that the Bill will reflect all the consultations that had taken place with the industry during the formulation of the Bill,” according to the statement.

The government wants more stringent data storage rules to check the misuse of data by various companies (like transferring to third-parties), among other things. At the same time, it wants to ensure that it has better access to the data for any investigative purposes. Technology companies argue the rules would force them to change their business models, hurt planned investments and raise costs.
US-India trade groups as well as top US officials have expressed concerns around such rules in the past. “We’ll also push for free flow of data across borders, not just to help American companies, but to protect data and secure consumers’ privacy,” US secretary of state Mike Pompeo said last week ahead of his visit to New Delhi this month.

(With inputs from Reuters)

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