India’s Data Protection Laws Will be Critical in Attracting FDI and Pushing Digital Exports

At the cost of repeating a cliche, technology and data-driven innovations are at the centre of economic activity in what is now a digitally led era. Digital services trade relies heavily on the ability of organisations to process and transfer data across borders. At the same time, the need for protecting personal data has encouraged countries to develop progressive data regulations to ensure adequate protection to an individual’s rights.

As a world leader in information and communications technology, India has enormous potential to attract investments and grow its digital exports. And, with India negotiating trade agreements with several countries, including the UK, it will be important that the Personal Data Protection Bill strikes the right balance between localising data and enabling cross-border data flows. The stakes for policymakers, therefore, are high.

Data privacy and digital trade are often spoken about in a mutually exclusive manner. However, a progressive data protection regime provides the trust, regulatory certainty, protection and security needed to support digital trade.

The pandemic has made it clear that data flows are critical to the global economy’s functioning, for example, the adoption of digital services for business continuity, and societal responses such as staying connected, and monitoring and controlling vaccine production. Data flows will only continue to rise as more countries and sectors embrace digital transformation, while restrictive regulations could hinder growth and innovation.

As a result, countries, globally, are working to develop and implement data privacy frameworks that adequately protect citizen’s data, while allowing data to flow across borders in ways that support trade and innovation. In the recently published report by The Dialogue and the UK India Business Council, we set out how India and the UK can align their data protection regulations and create interoperability.

India and the UK can work together, sharing knowledge, experiences and best practices to develop emerging tech regulations. The UK government has recently listed India as a priority destination for a future data adequacy partnership, and ongoing FTA negotiations offer a framework to drive forward that discussion.

If India and the UK take this opportunity, they could create a model that works not just for the two countries, but also sets an example for the rest of the world.

Union minister Piyush Goyal rightly said that he wanted the FTA to create “frameworks that support the businesses of the future.”

This matters as India boasts of the second-largest startup ecosystem in the world, with Y-o-Y growth expected at 10-12 per cent and around 20,000 startups in India. Around 4,750 of these are technology led startups. Restrictive and differing regulatory regimes can impact compliances that would apply to these startups and if data flows are restricted, it could impact startups’ abilities to capitalise on the benefits of overseas collaboration.

With the Data Protection Bill still under discussion, the path to interoperability is work in progress. The proposed data protection law is an opportunity for India to develop mechanisms for data transfer treaties with like-minded countries. Bilateral data transfer treaties will not only help establish a strong privacy standard but will also allow data to flow between India and countries with which it holds such agreements, thus fostering innovation and trade. To achieve this, the data protection regime should seek to achieve the principles of adequacy and reciprocity, which includes allowing free flow of data, an independent data regulator and strong checks and balances.

In conclusion, policymakers should, without a doubt, update laws to address legitimate data-related concerns. But they should ensure that these laws and regulations are future-proofed and enable people, businesses, and governments to maximise the enormous societal and economic benefits of data and digital technologies.

We think it is in the interest of both countries to leverage the ongoing FTA negotiations and Prime Minister Boris Johnson’s India visit will be critical to advance steps towards the regulatory interoperability needed to achieve the full potential of both countries and maximise the creation of jobs and prosperity.

Meghna Misra Elder is Associate Director at UK India Business Council and Kazim Rizvi is founder of the think tank The Dialogue. The views expressed in this article are those of the authors and do not represent the stand of this publication.

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