RBI’s Data Localisation Policy.

Global online payment firms and service providers better watch out as the law on data localisation is finally here. With the deadline to transfer their customer data to Indian servers coming to an end on 15th October, the future looks uncertain for the likes of giant technology companies like Google and Amazon as far as their Indian businesses are concerned.

The important question here is what do we mean by data localisation? It basically means storing and  processing the data from where it had originated. So by passing this law all the sensitive information of customers or internet users which were stored in servers of other countries will now be restricted within the boundary of the country in which it had originally originated.This data could include our names, addresses , bank account  details, license number, browsing history , etc.

Reception:

This decision has not been welcomed by many foreign companies such as IBM, Google , Amazon ,Visa , MasterCard and many more. According to a recently published report 78 financial payment companies in India are yet to comply with these norms. Companies such as google say that cross border,  free flow of data is necessary for growth and development of an economy. Some companies like IBM argue that the physical location of data is irrelevant i.e the geographical location , since data can be hacked with the same ease from a server in Bengaluru as from a server in Boston. This does not seems to be the only problem as countries are now seeing this as a move to restrict international trade between countries by using restrictive policies  and regulations.

However several startup companies like Flipkart and PayTm have come ahead in the support of the decision and have openly stated how foreign based companies exploited  various loopholes in the policies to evade direct payment of taxes to the government.

Whatever the outcome of this decision maybe on the country’s economy in the long run , i think this will be a good move in the short run taking into consideration the immediate creation of employment . Hosting and storing  of data in India itself , will require construction of huge data centres across the country for holding over 2.3 million petabytes worth of data. It is forecasted that with the required investment in data management and storage , India will become the fifth-largest data centre market by 2050 .