The technological boom has made things easier for man. Jobs are accomplished with just a mere click or by swiping cards. However, these clicks and swipes come at a cost. Most of the data is either partly or completely stored outside India. The Indian Government too has a limited access to this data. And this is something that the Reserve Bank of India (RBI) plans on changing through its data localization rules.
Many companies throughout the globe, in the previous month, clawed their way to abide by the RBI’s deadline for localization of all sensitive data belonging to the Indian users of various digital payment services. Data localization is the act of physically storing data on any device within the borders of a country. At present, such data is stored in a cloud, out of India.
Recommended by Srikrishna committee in July-August, RBI’s diktat has followed the draft of data protection law. The draft recommended that the government should enjoy unfettered access to its citizens’ or residents’ data, for use in domestic policy making, through Big Data analytics and artificial intelligence.
Data localization makes it mandatory for companies, who collect critical data about consumers, to store and process the data within the borders of the country. Also, the RBI issued a circular stating that the payment-related data which is collected by payment providers should be stored in India only. It covered payment services like Visa, MasterCard, Paytm, WhatsApp and Google that offer digital payment services. Many companies have yet to abide by these rules. The RBI, at present, has not specified any fines or penalties for the delay.
With an aim to protect the personal and financial information of the country’s citizens from foreign surveillance and to give local governments and regulators the jurisdiction to call for the data when required, RBI has initiated the need for data localization. The issue of data localization garnered the necessary awareness after a spate of lynching across states was linked to WhatsApp rumours, while on the global front, it gained importance after the revelation of Facebook sharing user data with Cambridge Analytics, which is alleged to have influenced the voting outcomes in India.
Besides, data localization is vital for national security. It helps the law-enforcement agencies to access information that is needed for the detection of crime or to gather evidence. Also, this will create domestic jobs and skills and analytics, too. Agencies will have to depend on mutual legal assistance treaties (MLATs) to obtain access in the absence of data localization, which will only result in delaying the investigations. Not only this but also maintaining multiple local data centres will entail significant investments in infrastructure and higher costs for global companies.
Data localization does not promise to eradicate situations like Facebook-Cambridge Analytica, instead it ensures that domestic law enforcement can respond effectively better to our complaints.