India's data localisation policy will be counterproductive; adverse impact on US business in India: Senators

Two top American Senators have said that India's the data localisation policy will be counterproductive to the country's efforts to modernise its framework regarding law enforcement requests for data and will adversely effect American businesses in India.

Data localisation is an act of storing data on any device that is physically present within the borders of a particular country where the data was generated.

The Reserve Bank of India (RBI), in a circular in April, 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 gave time till October 15 to comply with the mandate.

"Data localisation requirements, such as those contained in the draft data protection bill and draft national e-commerce policy framework, will have negative impacts on the ability of companies to do business in India, may undermine your own economic goals, and will likely not improve the security of Indian citizens' data," Senators John Cornyn and Mark Warner said.

Cornyn from the Republican Party and Warner from the Democratic Party are co-chairs of the powerful Senate India Caucuses.

The two Senators – who also hold top leadership positions in their own parties – in a letter to Prime Minister Narendra Modi opposed the data localisation requirement of the Indian government.

When companies adopt high-quality privacy safeguards, the location of data has no bearing on whether the data is secure, they argued.

"In addition to effectively reducing data security, forced data localisation requirements create inefficiencies for both businesses and consumers, raising the cost of procuring and delivering data services including ones that local Indian businesses utilize on a daily basis,” Cornyn and Warner said.

"Ultimately, they also increase the cost, and/or reduce the availability of, data-dependent services," said the letter, a copy of which has been obtained by PTI.

The two Senators said that forced data localisation will also be counterproductive when it comes to India modernising its framework regarding law enforcement requests for data.

"Both the protection and security of data—as well as access to data for lawful purposes—can be enabled without a requirement that data be stored in a specific physical location. We encourage increased dialogue on these issues between law enforcement agencies in the US and India," the powerful Senators wrote.

(With inputs from agencies.)