Data Localisation

• Data localisation simply means restricting the flow of data from one country to another.
• The Personal Data Protection Bill requires companies to store a copy of certain sensitive personal data within India.
• Localisation will make it mandatory for companies collecting critical consumer data to store and process it in data centres present within India’s borders.

Significance:

• The main intent behind data localisation is to protect the personal and financial information of the country’s citizens and residents from foreign surveillance.
• Data localisation is essential to national security. Storing data locally is expected to help law-enforcement agencies to access information that is needed for the detection of a crime or to gather evidence.
• It may also enable the better exercise of privacy rights by Indian citizens against any form of unauthorised access to data, including by foreign intelligence.
• The economic benefits will accrue to local industry in terms of creating local infrastructure, employment and contributions to the AI ecosystem.

Issues:

• Cost issues: According to Facebook’s parent company Meta Platforms, requiring local storage and processing of data or similar requirements could increase the cost and complexity of delivering their services.
• Global connect: A big part of providing services to people in India, acc. to Meta, is to enable them to communicate globally.
• State control of Data and its effectiveness: Critics not only caution against state misuse and surveillance of personal data, but also argue that security and government access is not achieved by localisation. Even if the data is stored in the country, the encryption keys may still remain out of the reach of national agencies.
• Trade Distortive: Countries like the USA has criticised the policy of data localisation as a ‘significant barrier to digital trade’.
• EU had said in its response to India’s data protection draft bill that “data localisation requirements appear both unnecessary and potentially harmful as they would create unnecessary costs, difficulties and uncertainties that could hamper business and investment.

Way forward:

• In order for localisation-related norms to bear fruit, there has to be broader thinking at the policy level.
• This may include, for instance,
• Reforming surveillance related laws,
• Entering into more detailed and up-to-date mutual legal assistance treaties,
• Enabling the development of sufficient digital infrastructure,
• Creating appropriate data-sharing policies that preserve privacy and other third party rights, while enabling data to be used for socially useful purposes.

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