New Data Draft Policy of the Government – Prospects and Challenges

In its ongoing effort to regulate the E-commerce, Cloud and Social Media data management, the government has proposed to bring out its revised policy for public comments very soon.

It is to be remembered that its earlier version from February 2019 had drawn a lot of criticism from the MNCs as they thought the government was trying to restrict data access by placing restriction on storage and mirroring of Indian users’ data overseas.

Sometime ago, responding to the queries of DST Secretary Mugdha Sinha at a virtual conference in Rajasthan, the DPIIT Secretary Guruprasad Mohapatra asserted that the E-commerce was a fast emerging sector and it was difficult to predict where it would go in the next couple of years.

"The E-commerce policy firstly should lay down a very clear policy on what is data; what kind of data the E-commerce companies can use; how the citizens’ right of privacy can be protected; how the E-commerce data is being leveraged for other purposes, how the other commercial benefits accrue to the E-commerce data holder and how citizens can have access to those benefits.

Secondly, there are lot of counterfeit and inferior products and violation of various safety standards. How can these be taken care of and how can consumer rights be protected? We have now finalised a draft E-commerce policy, very soon we will place it in the public domain. That time we will request all of you to give comments on how to improve on the content of the draft e-commerce policy.”

--Guruprasad Mohapatra, Secretary, DPIIT

According to the revised draft policy Amazon, Flipkart, Facebook, YouTube and other organisations that store or mirror Indian users’ data overseas will be under scanner for a periodic audit. They’ll have to make the users’ data available to the government within 72 hours or pay a penalty.

“For those categories of data which can be stored/mirrored abroad, companies would have to ensure that adequate safeguards are in place at the specified data storage location through a comprehensive periodic audit,” according to the revised proposed policy.

According to the new draft, the government, in consultation with respective parties, will decide the categories of E-commerce that will need to mirror or store data locally. It aims to restrict cross-border transmission of data related to defence, medical records, biological records, cartographic data and genome mapping without proper permission from the government authorities.

Possible Impacts on the IT Sector

If this policy comes in place, it means that the data management in various kinds of Cloud infrastructure will definitely come under the government scanner and unless the Cloud companies take permission from the government, they will have to build indigenous infrastructure, to store and manage data locally in India.

Following are the immediate possible outcomes of this policy –

• This is done to ensure security to the country in these unstable times. But this will have a positive impact on the workforce in that the local Cloud Solutions Providers will have greater scope of providing services from infrastructure built in the country.
• Further, the Datacentre infrastructure building professionals will have a greater scope to provide their expertise for the locally built Datacentres.
• If the AI-enabled analytics are skewed away from giving advantage to the multinationals, as is the case now, then it will definitely have a positive impact on the local E-commerce websites and also on the local Data Analytics experts who can manage the locally stored data much more efficiently at lower costs.
• However, there may be some challenges involved. First, the multinationals and the Chinese companies may not surrender their advantage easily. They have the edge of their powerful governments with them. Indian government will have to strengthen its power in the global policy domain to counter this. It’s not impossible, but it requires hard work and a willingness to gather opinions from different quarters and an ability to analyse all this opinion and arrive at the best strategy.
• The clause for the overseas companies to surrender their data within 72 hours has to be discussed with policy experts, as if not used judiciously then it may lead to encroachments on people’s democratic rights and may result in public protests. This has to be sorted out carefully so that the government doesn’t enter into a prolonged head-on conflict with the public.
• Another aspect for the Indian E-commerce companies to consider is that they have to upgrade their facilities and efficient management of the E-commerce to match or outshine the multinational E-commerce companies. Otherwise the end consumers will be terribly unhappy and the entire plan will fall flat. It depends upon the Indian players to prove their mettle internationally in the market, to make this policy work.
• There is a danger that certain large Indian conglomerates may use it to their advantage, leaving the smaller players at a disadvantage. The government has to check this.

If the government, the Indian E-commerce players and its policy experts judiciously draft this policy, it can make India powerhouse in economy. If this remains a political rhetoric and gives advantage to certain players close to the government, then it will backfire.