This article originally appeared as an op-ed in The Daily Pioneer on 19 February 2019.
While India has legitimate questions about how companies handle data, to protect trade, Governments must address harmful data policies.
Top officials of the United States and India joined leading CEOs last week to discuss trade, investment and the business climate between the two nations at the India-US Commercial Dialogue and CEO Forum in New Delhi. Despite a robust dialogue, the meeting was a missed opportunity for officials from both nations to address a series of new measures regulating the flow and storage of data in India that threatens to undermine this critical trade relationship. India and the US must continue to engage and address these problematic data policies before they cause further harm to the economic growth of both countries.
From payments to e-commerce to retail to farming, digital data is the lifeblood of any modern economy. The ability to seamlessly move, store and process data at locations scattered across the world drives the growth of digital services and reduces production costs, leading to the expansion and prosperity of businesses globally. As a sign of this success, thousands of Indian companies — of all sizes and sectors, especially in the tech industry — have been launched over the last decade. Further, growth and vitality of India’s international market has attracted countless American companies that now offer digital services to invest in the local economy and Indian employees.
However, India’s recent regulations, requiring businesses to store data on Indian soil and restricting the transfer of data outside the country, jeopardise progress of not only our country but American business partners, too. Worrisome actions by India include: Its proposed privacy law, the Reserve Bank of India’s (RBI) data localisation directive and new data localisation measures for e-commerce, cloud computing and other sectors — all of which force companies to store their data locally in India. In some instances, they restrict businesses from moving copies of certain types of data across borders. For example, the RBI’s directive requires all Indian payment data to be stored only in India, cutting off the Indian market from global data analytics, cyber threat assessments and payment products.
The digital relationship between the US and India is significant. Latest data shows that 61 per cent of India’s software services exports — $66 billion — goes to the US. Moreover, India runs a $16.5 billion trade surplus in IT services with the US — more than any other country. India’s new restrictions on data will curtail success. Collectively, the measures will impose millions of dollars in compliance costs for companies in India and increase costs and limit services for Indian consumers. Recent research also shows data localisation regulations can increase a company’s computing costs by up to 60 per cent and reduce the regulating country’s Gross Domestic Product by 0.8 per cent.
India raises legitimate questions about how companies handle data. The Indian Government has every right to ensure that citizens’ data is appropriately protected and that law enforcement agencies can review data that companies hold when needed. However, there are ways to protect privacy or assist law enforcement investigations without imposing burdensome regulations that hurt Indian businesses and consumers.
Governments across the world share India’s concerns and the international community is working to find solutions. For example, the Asia-Pacific Economic Cooperation (APEC) forum has created the Cross-Border Privacy Rules (CBPR), an international, interoperable system that lays on top of national privacy laws to protect the privacy of citizen data as it travels across borders. In addition, the US has passed the CLOUD Act, which creates a framework for countries to negotiate agreements through which they may gain timely access to data across borders.
Neither India nor the US wants to reverse the shared prosperity the two have enjoyed over the last decade. Given the billions of dollars that flow between both countries and the countless exabytes of data stored in India and the US, it is incumbent upon officials to reach a compromise that promotes strong digital relationship and rolls back data localisation requirements while respecting India’s sovereignty. We believe they can achieve this balance and encourage both nations to build a digital future together.