DPDP Act: Transforming data privacy into India’s digital advantage

Is ensuring data privacy just a matter of compliance, or is it India’s next big competitive edge? This question has been on the minds of business leaders ever since the Digital Personal Data Protection (DPDP) Act came into prominence in 2023. In today’s rapidly evolving digital landscape, organisations are becoming increasingly digitised, leading to an exponential growth in data collected, processed, and stored.

Further, with the advent of AI-driven utilities and tools, companies are poised to embrace this data revolution, which encompasses information from employees, customers, vendors, and contractors alike.

In this data-centric era, the DPDP framework emerges as a crucial mechanism to ensure that data practices are adequately safeguarded. By embedding trust for fiduciaries, principals, and the wider ecosystem of Indian Inc., DPDP positions the nation as a responsible steward in the realm of personal data handling.

This not only elevates India’s global stature but also reinforces a commitment to protecting individuals’ personal information in an ever-connected global geography. The act has ushered India’s regulatory landscape into a new era of novel and sophisticated data protection practices and holistic adoption of data strategies.

Data security regulations were fragmented across regulators until the implementation of DPDP in India. With this Act, privacy guardrails will now be standardised across sectors, industries, and data ecosystems. As organisations move towards onboarding digital platforms, AI tools, API-driven data exchanges, and large-scale automation, their customer data acquisition responsibilities will now fall under a consolidated data privacy regime.

The focus areas of the DPDP Act and its Rules 2025 suggest a forward-looking approach.

Maintaining trust and transparency: By emphasising clarity and simplicity, the Act aims to transform consent into a more user-friendly experience, reducing the complexities often associated with comprehending data usage policies.

The rules envision the use of technology-driven solutions, such as standardised digital consent mechanisms, which make it effortless for individuals to understand the implications of their consent. Additionally, the DPDP framework anticipates shifts in global data trends, incorporating provisions for dynamic consent that allow individuals to adjust their consent preferences easily as their understanding and the context of data usage evolve.

The concept and introduction of the consent manager is a stepping stone to address the dynamic consent management needs that the data principals will opt for.

Redefining retention: To address challenges related to data retention faced by B2C organisations, rules have provided clear guidance on data erasure.

“For organisations, the impact of the DPDP Rules extends far beyond compliance. There is a definitive shift toward centralising privacy responsibilities and embedding ‘privacy by design’ practices at every operational level.”

One of the significant shifts is the requirement for deletion of inactive user data after defined retention periods, with transaction logs retained for at least one year. For large e-commerce, gaming, and social media platforms, personal data must be erased after three years of inactivity, with prior notice to the data principal. The rules now emphasise consent-based data retention over activity-based data retention for the select sectors.

Resilient data management: The rules mandate reasonable security safeguards, including encryption, access controls, and regular backups. In the event of a security breach, organisations must notify the Data Protection Board (DPB) within 72 hours and inform affected individuals without delay.

Maintaining detailed logs and audit trails is now a compliance imperative. The aim of introducing this requirement is to try and prevent a security event from spreading to similar companies or sectors.

Privacy first: A compliance mandate or a competitive advantage? For organisations, the impact of the DPDP Rules extends far beyond compliance. There is a definitive shift toward centralising privacy responsibilities and embedding ‘privacy by design’ practices at every operational level. Reviewing historical learnings of algorithms is one of the key messages for significant data fiduciaries.

Leaders must oversee end-to-end mapping of all personal data flows (internal, external, vendor, partner), automate user consent and rights management, and build strong breach response programmes that proactively align with regulatory timelines. This may be looked upon as a competitive advance for a lot of industries:

• Global market outreach: Organisations will see comparatively faster growth in global opportunities across technology, ITeS, FinTech, and HealthTech, which are key growth drivers of India’s growth story.

• Privacy first as a product differentiator: Technology companies may use DPDP compliance as an edge to showcase product differentiation, especially in regulated sectors.

• Strong third-party governance as a confidence booster: DPDP-compliant vendors will see a trend of faster onboarding as a preferred vendor with fewer legal barriers.

• Long-term loyalty: Prioritising customer impact will build long-term trust, lower churn, and improve brand preference.

DPDP: Charting the course for trust-driven growth in India’s digital era

India’s DPDP Rules are not merely imposing strict compliance measures, but also setting the base for unifying governance, streamlining accountability, and developing sustainable data-handling practices across sectors. Organisations embedding privacy into their workflow design and culture are best positioned to turn regulatory obligations into operational agility and stakeholder trust.

As every business becomes digital by default, data will serve as the bedrock for decision-making. The DPDP regime equips Indian enterprises with the tools to future-proof themselves for innovation, resilience, and global competitiveness. Organisations that see data privacy as a business advantage and not just as a regulatory hurdle will own the next phase of digital adoption in India. DPDP isn’t just a law—it’s your roadmap to trust and growth. Are you ready