Data Protection Bill: EU cations India against stressing on mandatory local storage

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New Delhi | November 22, 2018 6:37 AM

The European Union has suggested that the Indian government, which is in the process of making a data protection law, should not stress on data localisation as apart from being unnecessary and potentially harmful to the cause of data protection, any such measure would create unnecessary costs, difficulties and uncertainties that could hamper business and investments.

data protection law, Electronics and IT Secretary, GDPR, Justice Srikrishna panel, data privacyThe caution with regard to data localisation being part of a proposed data protection law is part of EU’s responses to the draft Data Protection Bill drafted by Justice Srikrishna committee which is being processed by the ministry of electronics and information technology.

The European Union has suggested that the Indian government, which is in the process of making a data protection law, should not stress on data localisation as apart from being unnecessary and potentially harmful to the cause of data protection, any such measure would create unnecessary costs, difficulties and uncertainties that could hamper business and investments.

The caution with regard to data localisation being part of a proposed data protection law is part of EU’s responses to the draft Data Protection Bill drafted by Justice Srikrishna committee which is being processed by the ministry of electronics and information technology. As is known, most global companies present in India who deal with data have been opposing data localisation, which basically means that whatever data is generated in the country should either be stored within the country or at least a mirror copy of it should be stored in the country.

“As a matter of economic policy, such an approach (data localisation) will create significant costs for companies — in particular, foreign ones — linked to setting up additional processing/storage facilities, duplicating such infrastructure etc and is thus likely to have negative effects on trade and investment. If implemented, this kind of provision would also likely hinder data transfers and complicate the facilitation of commercial exchanges, including in the context of EU-India bilateral negotiations on a possible free trade agreement,” EU has said.

The Srikrishna committee while not recommending a blanket local data storage clause has identified circumstances under which data has to be mandatorily stored in the country and cases where it can be stored with mirroring provisions. It has, however said that critical data has to be stored only in the country.

It has said that personal data determined to be critical will be required to be stored only in India and there will no cross-border transfer of such data. Meanwhile, from October 15, the Reserve Bank of India has made it mandatory for all payments data to be stored in the country.

The EU has said that India’s striving tech industry does not need forced-localisation measures as it is already a top world leader in the data processing industry and has built one of the best digital ecosystems in the world without having recourse to forced localisation measures. “On the contrary, such measures might deter foreign investment as foreign clients and companies might prefer to switch the processing of their data to a country that does not impose these types of costly constraints,” it has added.

On the need for localisation on security grounds, EU has said that data localisation is by no means the only way to ensure that law enforcement authorities are enabled to obtain (legitimate) access to electronic evidence. “In this respect, the EU is facing similar challenges as India.

However, rather than forcing the localisation of personal data in the EU, it is currently preparing legislation that will allow the police and prosecutors to access electronic information, irrespective of whether it is stored in the EU or not.

A similar approach has been adopted by the United States with the US CLOUD Act. Aside from these national legislative approaches, the ideal solution might actually be a multilateral arrangement allowing for mutual access to data,” it has said.

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