Leading Indo-US business advocacy groups have raised concerns with authorities over the Reserve Bank of India’s directive asking payment companies to store data locally.
While arguing that restricting data flowing across borders would risk a country’s global competitiveness and economic growth, they said such a move would also not necessarily ensure data protection.
The directive could hurt India’s software export market, said Jay Gullish, a senior director of the US-India Business Council (USIBC). “There is also the risk of a backlash from its (India’s) IT export markets, which could result in reciprocal changes that could undermine India as the preferred outsourcing destination,” he said.
The lobby group is working with its member companies and policymakers to find a solution that will achieve intended regulatory objectives without limiting the movement of data, Gullish told ET.
Echoing similar views, US-India Strategic Partnership Forum (USISPF) president Mukesh Aghi said data were the new oil and in a global services economy, of which India is an important partner, a free cross border flow of data was essential. “We have very clearly expressed concerns to the concerned government department and have also indicated companies’ willingness to address their concerns,” he said.
Earlier this month, the RBI asked all payment companies operating in India to set up data storage facilities within the country in the next six months. The central bank in its notification said while the payments ecosystem had grown in India, it needed “unfettered supervisory access” to the transaction data to ensure better monitoring of the network. The stringent six month deadline has attracted the ire of several sections of the industry which argued that it was too short a deadline to comply with.
The industry also fears that the diktat would lead to disruption of well-established global networks as well as dampen new innovation in the sector.
“Given that the (Justice BN) Srikrishna Committee report (on the policy) is under progress, we believe that a directive like this, albeit with certain amended clauses, should only be pursued post the finalisation of that report.”
USISPF also believes industry must be consulted before the government or the regulators issue any directives, he said.
In fact, post the recent Cambridge Analytica and Facebook data breach controversy, the Indian government is considering asking all global firm to ensure that data of Indians are stored locally. Prime Minister Narendra Modi is said to have issued a directive to ensure the data localisation mandate.
Gullish said data localisation measures had forced firms to “leave” markets and could impede the development of IT.