Don’t compromise on local data storage

Don’t compromise on local data storage

But where is Indian companies’ data hunger?

Two American senators, co-chairs of the Senate India Caucus, have written to the government of India, asking for relaxation of the RBI directive on local storage of financial data. This would be seen as a key trade barrier, they say. The argument is misplaced. The government should take the effort to explain to US lawmakers — the India Caucus and to other senators as well — that the purpose of the law is not protection but security, and India’s sovereign right to have control over Indian data. India’s National Payments Corporation’s payments switch and the APIs constituting IndiaStack pose a threat to the business model of Visa and MasterCard, it is true. Similar developments in China aggravate the threat. But that is innovation, not protection.

Neither the RBI directive nor the draft data protection law says that local storage of data should be carried out by Indian companies. In all probability, once local storage of data is enforced, the biggest gainers would be the cloud storage businesses of Amazon, Google, Microsoft and other global giants in data storage. Sure, they would have to invest in local server farms. But given the scale of the likely data that would be generated by Indian users in the near term — India rose from being one of the lowest-ranked users of mobile data to the highest-ranked in just three years — there is a strong business case for building local storage capacity by any company in the cloud storage business. Amazon has endorsed the Indian policy of local storage. Whats-App, owned by Facebook, is preparing to comply.

Indian courts and the Indian government should not be thwarted in any legitimate attempt to access Indian data because of jurisdictional disputes. Storing Indian data within India’s geography, however, does not automatically deliver any strategic advantage to Indian enterprise. Indian companies must show the entrepreneurial imagination and hunger to use that data creatively. Policy must create a framework for sharing data without compromising individual privacy. Thought and action on this front remains scarce, as of now.