Data protection bill: Parliamentary panel's recommendations to hit India biz environment, FDI flows, say global industry bodies

New Delhi: Implementation of the proposed Data Protection Bill, as recommended by a Parliamentary panel, will significantly degrade India's business environment and reduce foreign investment inflows, a dozen global industry bodies have said in a joint letter to the government.

The industry associations have sought wider consultations with stakeholders before the bill is introduced in Parliament.

The US, Japan, Europe, Southeast Asia and India based industry bodies, including ITI, JEITA, TechUK, US India Business Council, and Business Europe, represent thousands of companies and technology majors like Google, Amazon, Cisco, Dell, SoftBank and Microsoft.

The letter, dated March 1, addressed to Union Communications and IT Minister Ashwini Vaishnaw, said the Parliamentary panel's report includes novel recommendations for the personal data protection bill which, if enacted, would create powerful disincentives for India's innovation ecosystem and the promise of a trillion-dollar digital economy.

The bodies have expressed concern on inclusion of non-personal data, restrictions on cross-border data transfers, data localisation obligations, mandatory hardware and AI software certifications.

The industry bodies said mandates for companies to locally store their data in India will degrade the privacy and cybersecurity protections by limiting state-of-the-art solutions that are globally available.

"When these and other recommendations in this Report are considered as a whole, their result, if enacted, would lead to a significant deterioration in India's business environment, degrading the Ease of Doing business in and with India, and negatively impacting India's domestic start-up ecosystem and global competitiveness," the letter said.

The industry bodies said recommendation to establish a domestic alternative to the international SWIFT banking system is also unprecedented and appears beyond the scope of the report's objectives, and would have a significant detrimental impact on India's financial sector and digital payments ecosystem.

When contacted, ITI country manager for India Kumar Deep said, "There needs to be an extensive consultation to make it a privacy ready future legislation. India can be a leader in this regulatory domain by devising a dynamic data protection legislation keeping in mind the interest of all stakeholders."

Opposition political parties have also expressed concern on the panel's recommendations regarding the proposed data protection authority, as well as clauses that they feel interferes with the rights of states.

Minister of State for Electronics and IT Rajeev Chandrasekhar on Thursday had said the government is going through the concerns that stakeholders have shared with the ministry.

"So we are extremely careful that whatever legislation we do in the digital ecosystem will be enabling legislation...Legislation that improves the momentum of growth of the digital economy rather than create any problems going down the road," he had said.