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Data localisation may hit GDP, ease of doing business ranking, says report

The Dialogue, a think-tank, said that data localisation may incur a nearly 1 percentage point loss in gross domestic product (GDP) in the short and medium term.

Aprajita Sharma       Last Updated: November 20, 2018  | 17:56 IST
Data localisation may hit GDP, ease of doing business ranking, says report

At a time when debate around data localisation is gaining ground, The Dialogue, an emerging public-policy think-tank, came up with a report stating India may incur a nearly 1 percentage point loss in gross domestic product (GDP) in the short and medium term if the country goes ahead with forced data localisation in its current avatar.

The report says that it could also impact India's ease of doing business ranking if data, on which economies of the future are being built, becomes an expensive commodity. The report, titled 'Data Localisation in a Globalised World: An Indian Perspective' added that localisation policies may have a cascading effect on the economy, costing an average Indian worker up to 11 per cent of his/her monthly salary.

The report was launched on Monday at an event at Constitution Club of India (CCI).

Kazim Rizvi, Founding Director, The Dialogue, pointed out that he is not against data localisation per se, but the way it is being implemented in the name of data access and data security. "Our approach towards data should be to maximise the potential of cross-border data flows. Rather than deploying a strict hand of forcing companies to store data in India through forced localisation, we should instead incentivise them to come, locate and process their data here," said Rizvi.

"Moreover, to seek access of data for law enforcement, we should work with other countries on a bilateral level and enhance our domestic privacy regime to meet global standards under international privacy frameworks," he added.

Speaking at the event, Avik Sarkar, Head-Data Analytics Cell, NITI Aayog, said the likes of Facebook, Google and Apple own only 10-15 per cent of global data, so by localisation we are only addressing a part of a big puzzle.

"Instead of getting into complex debates, it makes sense to leverage what we already have. India is in a position to make use of its already available data to build constructive policies. Besides, you cannot really access data as long as country, company and funders, all three are not in your own territory," he said, representing his own views and not those of NITI Aayog.

In a panel discussion, Ananth Padmanabhan, fellow, Centre for Policy Research, pointed out that data localisation is more of a policy versus principal debate than policy versus policy.

"While there might be some valid reasons to build capacity for better access of data by law enforcement agencies, but my fundamental right to carry on with my business should not be hurt. We must have some data as to how many security cases have actually been attributed to servers being located outside before we enforce data localisation for security purposes," he said.

Refuting the argument that China has implemented data localisation, then why not India, Padmanabhan noted that China had done a lot of investment in research & development (R&D) and infrastructure  before it asked global firms to comply with its localisation policies.

Technology Lawyer Meenu Chandra identified that localisation policies may result into conflicts between the policies of two governments. "India may ask global players to localise all the data in its territory, but what if global companies are required to report some data to internal authorities as per their own laws?," he pointed out.

The report, comprising twelve chapters, also highlighted that the security of data could, in fact, be compromised as locating all data in one place may increase the risks to cyber threats. "The ideal situation for institutions is to store data in different parts of the world to diversify risk. Quality of services offered to Indians today may also be impacted as localisation will increase costs and may also not offer the best options for tech companies to provide high-end services, as it may not be available currently in India," It says.

The think-tank studied data localisation's impact on start-ups as well. "Start-ups will be the most affected as it will cost more to setup and run business as start-ups may not get to store data on cheaper alternatives, such as the cloud infrastructure, if all data is forced to be located in India."

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