US tech giant plans to intensify against data localization in India

Tinuku - US technology giants plan to intensify lobbying efforts against data localisation requirements, which they say will undermine their growth ambitions in India. US trade groups, representing companies such as Facebook, Amazon, American Express and Microsoft, have opposed the push to store data locally.

That push comes amid rising global efforts to protect user data but is one that could hit planned investments by the firms in the domestic market, where the companies currently have limited data storage. The issue could further undermine already strained economic relations between India and the US.

Tinuku US technology giant plans to intensify against data localization in India

Technology executives and trade groups have discussed approaching Prime Minister Narendra Modi’s office to appraise him of their worries. Separately, the industry is considering pitching the issue as a trade concern, including at the India-US talks in September in New Delhi.

Though a final decision hasn’t been made, the deliberations come while the United States and India are locked in a dispute over US tariff increases and on the Indian policy of capping prices of medical devices, which hurts American pharmaceutical companies.

“This issue is important enough to be discussed at the India-US trade level. Data localisation is not just a business concern, it potentially makes government surveillance easier, which is a worry.” said Amba Kak, global public policy adviser at Mozilla Corp.

Stricter localisation norms would help the government get easier access to data when conducting investigations, but critics say it could lead to increased government demands for data access. Technology firms worry the mandate would hurt their planned investments by raising costs related to setting up new local data centres.

Greater use of digital platforms in the country for shopping or social networking have made it a lucrative market for technology companies, but a rising number of data breaches have pushed the government to develop strong data protection rules.

Shamika Ravi, a member of the Prime Minister’s Economic Advisory Council, said data localisation was a global phenomena and India wasn’t an outlier. “It’s in the long term strategic and economic interest.”

The government committee on data privacy last month proposed a draft law, recommending restrictions on data flows and proposing that all “critical personal data” should be processed only within the country. It would be left to the government to define what qualifies as such data.

In a meeting last week organised by lobby group US-India Strategic Partnership Forum, executives from Facebook, Mastercard, Visa, American Express, PayPal, Amazon, Microsoft and others discussed plans to approach Indian lawmakers, including parliamentary panels on information technology (IT) and finance.

The industry also discussed approaching media and internet groups to explain why data localisation would be bad for India’s booming IT, e-commerce and payments landscape, the sources said. “People are fairly stressed and scared,” said an executive working for a multinational technology firm.

The US-India lobby group said it was “nearly impossible” to implement “industry-specific regulations in our global data environment without the ripples being felt”. It did not comment on its recent meeting, but said it will continue facilitating policy discussions.

The bill, opened for public comments this week, will later go to Parliament for approval. The US-India Business Council has brought in the Washington-headquartered law firm Covington & Burling to suggest submissions on India’s data protection law.

The firm’s 43-page draft recommendations listed removing data localisation requirements as a top priority and called New Delhi’s proposed move a “protectionist approach”. The US-India Business Council did not comment on how it would act on the recommendations of Covington & Burling, which declined comment.

The lobby group’s president, Nisha Biswal, however, said India’s draft privacy law was of “great importance,” and that the group would share its concerns with the government directly.