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"The U.S. has a vested interest in making India a digital colony"

There is a reason why Denmark, last year, announced the role of a Digital Ambassador. The ambassador is based out of Silicon Valley to practice what many call 'Techplomacy'.

twitter-logo BusinessToday.In        Last Updated: October 16, 2018  | 20:17 IST

There is a reason why Denmark, last year, announced the role of a Digital Ambassador. The ambassador is based out of Silicon Valley to practice what many call 'Techplomacy'.  

Europe is increasingly worried about the powers of GAFA - Google, Apple, Facebook and Amazon - the four companies, all American, which deal with personal data and an European document on data protection says, "GAFA has collectively made us accustomed to voluntarily waiving our rights regarding personal data". Many countries in the European Union now want 'Digital Sovereignty'.

That's a term coined in early 2000. It is back in fashion again. Only this time, it is Indians (domestic companies and think tanks) who are referring to Digital Sovereignty more. Not just in the context of multinationals wielding power over the country's consumer data, but in the context of digital colonisation by either America or China; and in the context of possible control over payments systems.

The immediate spark is central bank RBI's directive on data localisation. RBI set a deadline of October 15, 2018, for all payments companies to start storing data on Indian soil; it wants processing of payments to happen locally. Multinational payment companies such as Visa and MasterCard have been fighting the move, citing many challenges. Last week in Mumbai, RBI called a meeting to understand the resistance.    

Business Today spoke to an executive who was part of the meeting and strongly feels that national security is at stake. He didn't want to be identified. Here are three interesting excerpts from the interview:

RBI is right in being proactive: "When India went from one-factor to two-factor authentication for card payments, the world was on one-factor. India was an early mover and there were lots of opposition. The move paid off. Payments fraud in India is dramatically lower than in the U.S. Similarly, now is the time for data localisation. RBI is adamant on securing the payments system. So they want the processing of payments to happen locally. Out of the 70 payments systems in India, more than 60 have already agreed; except a handful."

Why localisation: "The world is now seeing weaponisation of the payments system. After 9/11, everyone started monitoring the payments system for terror. In the last 2-3 years, payments have become an actual tool for asserting power. Traditionally, the source of power was military. Then it was economic. Today, there is a third source, the digital platforms. GPS, payment systems, identity systems. The digital platforms can get weaponised. So every country has to fight for Digital Sovereignty. If India's payments system is controlled by others, India is controlled by others. Any sanctions against India, in the future, could be around payments. Nobody likes the change. Therefore you see an organised effort by all the U.S. affiliated trade bodies to thwart it. The U.S. has a vested interest in making us a digital colony."

What are multinational firms resisting: "They first said the guidelines are not implementable and technologically is not feasible. The claims were not true.  Some of the claims were just confusion. They got resolved in the first 5-7 minutes of the RBI meeting. One of the claims was that fraud management will be impacted - it doesn't. The guidelines say that the primary data must reside in India. But if you want to look for patterns and fraud management, and the data has to go somewhere else for a bit because you want to pool the data for some patterns, it is allowed."

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