Sansad TV Perspective : Data Localisation

In the series Sansad TV Perspective, we bring you an analysis of the discussion featured on the insightful programme ‘Perspective’ on Sansad TV, on various important topics affecting India and also the world. This analysis will help you immensely for the IAS exam, especially the mains exam, where a well-rounded understanding of topics is a prerequisite for writing answers that fetch good marks.

In this article, we feature the discussion on the topic: ‘Data Localisation’

Anchor: Vishal Dahiya

Guests:

1. Khushbu Jain, Advocate, Cyber Security Laws
2. Amit Dubey, Data Technology Expert
3. Huzur Saran, Professor, Department of Computer Science & Engineering, IIT Delhi

Highlights of the Discussion:

• What is Data Localisation
• How is Data Generated
• Significance of Data Localisation
• India’s stand on the issue of data localisation
• Challenges 

Introduction: 

• In 2006 British mathematician Clive Humbly said that Data is the oil of the 21st Century. This has indeed turned out to be true with the rapid growth of the digital economy. 
• Data plays an increasingly important role as an economic and strategic resource. It can be used to make decisions with economic impacts, environmental impacts or effects on health, education or society in general. 
• The volume of data in the world is increasing exponentially. As per UN’s digital economy report, 2021–64.2 zettabytes of data were created in 2020 which is a 314 percent increase from 2015. 

What is Data Localisation:

• Data localisation refers to various policy measures that restrict data flows by limiting the physical storage and processing of data within a given jurisdiction’s boundaries. 
• Multiple countries have adopted localization policies to combat multiple concerns over the free flow of data.
• There are four key types of localization variants. 

(a) conditional localization that entails a local storage requirement

(b) unconditional local storage requirements (for all personal data)

(c) unconditional mirroring requirements (for all personal data) and 

(d) the unconditional free flow of data with bilateral/multilateral agreements for data access and transfers. 

• In the Indian context, data localization has made it mandatory for organisations to collect critical consumer data for storing and processing data in data centres operating within the Indian subcontinent.
• India’s mandatory data localisation position has garnered support from United Nations-backed bodies, marking a shift towards genuine concerns as expressed in many quarters.

How is this data generated?

• Digital information has become so entrenched in all aspects of our lives and society, that the recent growth in information production appears unstoppable. Each day on Earth we generate 500 million tweets, 294 billion emails, 4 million gigabytes of Facebook data, 65 billion WhatsApp messages and 720,000 hours of new content added daily on YouTube.
• In 2018, the total amount of data created, captured, copied and consumed in the world was 33 zettabytes (ZB) – the equivalent of 33 trillion gigabytes. 
• This grew to 64.2 ZB in 2021 and is predicted to reach 175ZB by 2025. 

Significance of Data Localisation:

1. Protecting Personal Data

• The personal and financial data which is available on the cloud is subject to foreign surveillance.
• The issue of Cambridge Analytica (who are alleged to have influenced voting behaviour, and thereby the outcome, on data.)
• Data harvesting threats.
• Better control on the nature of the use of Data, the extent of the use.

      2. Economic Aspect

• India would have a competitive edge for their local companies, in the case of localised data.
• The information capital available to the domestic market and company in specific will be profitable for them. 
• The government can tax the revenue generated from that data, wherever feasible, akin to taxation on the inflow and outflow of goods and services. 
• Job opportunities within the country will rise for the data analytics sector and thus, witness economic development.

      3. Law Enforcement Issues

• Storage of data at a local location facilitates access to information by the authority when needed.
• Local Storage of data is necessary for smooth law enforcement,  without any additional measures.  

     4. National Security Dimension

• Law enforcement agencies often require information while investigating crimes.
•  Local storage of data can help these authorities to access it in a timely manner.
• When data is not stored locally, agencies have to access the Data through Mutual Legal Assistance Treaties (MLATs)
• Countries sign agreements under this, intending to aid each other in the legal processes of respective countries. 
• In some cases, it delays the investigation of crimes.

      5. Asymmetry in a Level Playing Field

• The regulatory playing field in the technological sector is different for a developing and a  developed country, putting the developing nation at a disadvantage.

India’s stand on Data Localisation:

• Since 2017, India has attempted to incubate governance of non-personal data, personal data, e-commerce regulation and artificial intelligence (AI) with a preference to harness “India’s data for India’s development.” 
• These policies, including the recently withdrawn Personal Data Protection Bill, are works in progress but this does not take away from the vast ecosystem of actors — including experts, civil society, and industry actively engaging with and attempting to shape digital policy-making.
• In 2018, based on the recommendations of the Justice Srikrishna Committee, the Reserve Bank of India (RBI)  mandated companies to locally store and process sensitive data belonging to Indian users of various digital payment services. 
• Draft National E-Commerce Policy Framework recommended data localisation and suggested a two-year sunset period for the industry to adjust before localization rules became mandatory.
  • It also Proposes incentives to encourage data localization and grant infrastructure status to data centres.
• At the G20 summit 2019, India boycotted the Osaka Track on the digital economy. The Osaka Track pushed hard for the creation of laws that would allow data flows between countries and the removal of data localisation.

Challenges with Data Localisation:

• When data is stored within the country, then the government will have to work on the functioning and effectiveness of payment system operators, incurring a much higher operational cost than usual. 
• Foreign firms are unwilling to comply as it would require them to spend money on infrastructure in the form of servers and buildings, and, of course, on employing local professionals to manage it.
• Lack of proper infrastructure required to collect and manage data. These barriers to the free flow of data may hurt businesses by increasing delays and higher costs of collaborative research or partnerships outside India. 

• Misuse and surveillance of personal data:
  • 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.
• Localisation of data can address foreign misuse, but the threats and risks involved in the domestic management of data are valid concerns.
• Could be a time-consuming process, where easy and profitable offshore cloud host services are available.

Conclusion:

Data protection is crucial for individual users and also at a larger scale economically and strategically from the national security point of view. India needs a forward-looking, futuristic mechanism, a legally backed data protection framework that would bind all parties and enable law enforcers to act quickly and safeguard Indian citizens and businesses  as well as ensure the nation’s security.

Read all the previous Sansad TV Perspective articles in the link.

Sansad TV Perspective: Data Localisation:- Download PDF Here