India has one of the most intricate data privacy regulations networks, with approximately five major laws governing various sectors of its economy. Managing this complex legal landscape can be challenging for business leaders, especially those operating across multiple industries. Each sector is subject to unique requirements, creating a patchwork of compliance obligations.
For example, the telecom sector is regulated by the Telecom Regulatory Authority of India (TRAI), while the IT sector operates under two distinct policies. Adding to this, the Indian Digital Personal Data Protection Act, 2023 (DPDP Act) governs all sectors where the personal information of Indian residents is collected, processed, or shared. Moreover, the proposed National E-Commerce Policy is expected to introduce even more rules for businesses handling consumer and transaction data.
Maintaining compliance can seem overwhelming with such an intricate web of regulations. Businesses face challenges in understanding sector-specific mandates, implementing appropriate data protection measures, and keeping up with evolving requirements.
This article aims to simplify the complexities of India’s data privacy regulations. We will provide an overview of these laws and demonstrate how InCountry can help your organization achieve seamless compliance, all while minimizing operational burden.
Who needs to comply with personal data protection in India?
The following entities are obligated to comply with all applicable Indian data protection laws:
- All data fiduciaries
Data fiduciaries are organizations or individuals who determine the purpose and means of processing personal data. They decide how the data will be used, stored, and processed. Examples of data fiduciaries include companies, government agencies, and NGOs handling personal data.
- Data processors
These are organizations that process personal data on behalf of a data controller or fiduciaries. They handle the data according to the controller’s instructions and for their specified purpose.
- Organizations outside India
Companies based outside India must comply with the Act if they process the personal data of individuals in India for goods, services, profiling, or targeted activities.
- Individuals
Persons handling personal data for professional purposes are also obligated to comply with India’s data protection laws.
- Government bodies
Public entities handling personal data are also subject to Indian data privacy laws, though certain exemptions apply for national security, public order, and other specified purposes.
What Indian data privacy laws do you need to know?
In this section, we shall highlight key data privacy policies in India that govern data privacy. They are as follows:
- Digital Personal Data Protection Act, 2023 (DPDP Act)
Also known as India’s personal data protection bill, the Digital Personal Data Protection Act (DPDP Act) is a comprehensive law governing personal data collection, storage, and processing. It introduces key principles like data minimization, consent, and user rights to safeguard individual privacy. This law applies to entities handling the personal data of Indian residents, even if they are foreign organizations. Non-compliance with the DPDP Act can result in substantial penalties, underscoring the importance of adhering to its provisions.
- Information Technology (IT) Act, 2000
The Information Technology Act (IT Act) is the legal framework for cyber activities in India. Sections 43A and 72A of the IT Act specifically address issues related to data protection. Section 43A outlines provisions for compensating individuals affected by data breaches due to a company’s negligence. Section 72A penalizes individuals who wrongfully disclose personal information, ensuring accountability for such actions.
- IT (Reasonable Security Practices and Procedures) Rules, 2011
The Information Technology Act (IT Act) mandates businesses to implement reasonable security practices to safeguard sensitive personal data. This includes measures like strong password policies, encryption, and regular security audits. Additionally, the IT Act requires businesses to have comprehensive privacy policies that clearly outline how they collect, store, and use personal data. This is particularly crucial for sensitive information such as passwords, health records, or financial details.
- Consumer Protection Act, 2019
The Consumer Protection Act safeguards consumer interests, including protection against the misuse of personal data. It provides mechanisms for consumers to file complaints and seek redressal for any harm caused due to unfair trade practices or violations of consumer rights. This act empowers consumers to take action against businesses that fail to comply with data protection standards.
- Telecom Regulatory Authority of India (TRAI) Regulations
The Telegraph Regulatory Authority of India (TRAI) regulates data privacy in the telecommunications sector. It has specific guidelines to prevent telecom companies from misusing customer data. These guidelines ensure customer information is handled responsibly and securely, safeguarding privacy rights.
Key principles of Indian data privacy laws
Although there are several data privacy laws in India, there are central principles that are common among these privacy laws. In this section, we shall highlight these key principles.
- Consent
Personal data must be collected with the clear and informed consent of the individual (data principal). In the case where the data subject decides to withdraw consent, their wishes are honoured promptly.
- Purpose limitation
This principle states that an individual’s personal information should only be used for the purpose for which it was collected and consent granted. It is common among Indian privacy laws.
- Data minimization
This principle states that only the data necessary to achieve the specified purpose should be collected and processed.
- Transparency
Data fiduciaries must provide individuals with a clear and accessible privacy notice explaining how their data will be used, shared, and stored. This ensures transparency throughout the process.
- Accountability
This is another central principle held by Indian data privacy laws. To this end, data fiduciaries are expected to ensure compliance with the Indian data protection bill, including the secure handling of personal data.
- Data security
The whole essence of India’s data privacy laws is for data security. Indian data privacy laws hold organizations accountable for implementing reasonable security measures to protect personal data from breaches, unauthorized access, and misuse.
- User rights
Indian data privacy laws guarantee individuals’ rights. These rights include access to their data, correction of inaccuracies, erasure, and the ability to transfer data to another service provider.
- Lawful processing
Data must be processed in compliance with applicable laws, including exemptions for law enforcement and national security under specified conditions.
- Grievance redressal
Individuals can seek remedies through grievance mechanisms provided by data fiduciaries or through regulatory bodies.
Data residency requirements in India
Data residency is the concept that personal data collected in a location should be stored within the same location. A scrutiny of various data residency requirements by country, emphasizes the idea to protect personal information from possible risks that come with data transfers. China, India, the EU, etc., are examples of countries with strict data residency requirements. In this section below, we shall review the requirements of data residency in India:
- Digital Personal Data Protection Act, 2023 (DPDP Act): Although the DPDP Act favors Indian data residency, it allows personal data to be transferred to countries notified by the government as having “adequate data protection standards.” The DPDP requires strict requirements for cross-border data transfers, so companies must be careful when transferring clients’ data outside India. Also, it is worth noting that the government retains the power to update these conditions, signaling the possibility of near-future changes.
- Reserve Bank of India (RBI) Regulations: Based on the Payment Data Localization policy, payment system operators, such as payment gateways and banks, are required to store all payment-related data entirely within India. This includes;
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- Information like transaction details, customer information, and payment credentials.
- Foreign processing is permitted for specific purposes, such as fraud detection, but data copies must remain stored in India.
These rules ensure that financial data critical to national security is readily available to Indian regulators and protected from foreign jurisdictions.
- Sector-Specific Regulations:
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- The Telecom Regulatory Authority of India (TRAI) mandates that telecom operators store subscriber data within India, including call records and messages. This ensures that data remains accessible for law enforcement and national security purposes.
- Though not yet fully regulated, frameworks such as the National Digital Health Mission encourage localized storage of sensitive health information to protect patient privacy and foster healthcare innovation within India.
Indian data sovereignty laws
A quick perusal of data sovereignty laws by country reveals that most countries place a premium on data self-governance and complete independence. The same is true about India. India’s data sovereignty laws are shaped by several privacy regulations governing how data is collected, stored, processed, and transferred. These laws protect the country’s data, ensure privacy, and foster economic growth while addressing concerns about foreign control over Indian data. In this section, we shall review some of these key privacy laws that form the data sovereignty requirements in India:
Digital Personal Data Protection Act, 2023 (DPDP Act)
The Digital Personal Data Protection Act of India (DPDP) is a comprehensive law designed to protect personal data by enforcing principles like lawful data processing, purpose limitation, and data minimization. It establishes the Data Protection Board of India to oversee compliance and provide a mechanism for redressal. The DPDP Act also emphasizes individual rights, such as the right to consent, data access, and correction. To ensure compliance, the Act imposes penalties for non-compliance, particularly in cases of data breaches and mishandling of personal data. Here are some provisions of the DPDP regarding data sovereignty:
- Data localization: India’s data sovereignty strategy heavily relies on data localization, which mandates storing specific data types within the country’s borders. For instance, the Reserve Bank of India (RBI) has enforced guidelines requiring payment-related data to be stored locally. This localization strategy aims to enhance data security, improve law enforcement access, and stimulate the growth of domestic data-driven industries.
- Cross-border data transfer: The DPDP Act permits cross-border data transfers to certain “trusted” jurisdictions, that is countries with data privacy laws similar to what is available in India. The goal here is to balance global business requirements with domestic control.
- Government oversight: The Indian government retains the authority to regulate and restrict data transfers in cases of national security, public order, or sovereignty concerns.
- User rights: It empowers individuals (data principals) to control their personal data, including rights to access, correct, and delete data. This ensures data sovereignty extends to individuals as well.
Reserve Bank of India (RBI) regulations on payment data
The Reserve Bank of India enforces one of the strictest data localization mandates in the financial sector. The goal here is to ensure that critical financial data is accessible to Indian regulators and law enforcement without reliance on foreign entities. In this section, we shall review some of these provisions:
- Payment data localization (2018 Circular): Requires all payment system operators, including banks, fintech companies, and payment gateways, to store all payment-related data exclusively within India. Examples of such data include transaction details, customer personal information, and account information.
- Limited foreign processing: Foreign processing is allowed for specific purposes, such as anti-fraud measures, but a copy of the data must remain stored in India.
Information Technology (IT) Act, 2000 and related rules
The IT Act serves as the overarching framework for cybersecurity and digital activities in India, with several provisions that support data sovereignty. Here are its provisions regarding data sovereignty:
- Section 43A: Imposes liability on entities for failing to protect sensitive personal data, ensuring accountability in data handling.
- Section 69: Empowers the government to intercept, monitor, or decrypt information on national security or sovereignty grounds. It reinforces sovereignty by mandating cooperation from entities handling data within Indian jurisdiction.
- IT (Reasonable Security Practices and Procedures) rules, 2011: These rules define sensitive personal data (e.g., passwords, financial information, health records) and require organizations to implement local security measures to protect it.
Telecom Regulatory Authority of India (TRAI) regulations
The recommendations issued by TRAI on Privacy, Security, and Ownership of Data in the Telecom Sector emphasize that consumers are the true owners of their personal data, with telecom service providers (TSPs) acting as custodians. TSPs must obtain explicit and informed consent from users before collecting, sharing, or processing their data. Additionally, TSPs should adhere to the principle of data minimization, collecting only the necessary data for service delivery and ensuring its secure storage. Furthermore, the recommendations advocate for the “Right to Be Forgotten,” empowering users to request the deletion of their data from telecom records. These recommendations are in line with the principles of data sovereignty, prioritizing user control and transparency. Here are a few things to note:
- Data localization in telecom: TRAI advocates for local storage of telecom data to protect against unauthorized access by foreign entities and ensure compliance with Indian laws. This aligns with broader governmental mandates on data localization under the Digital Personal Data Protection Act, of 2023, and RBI’s requirements for financial data.
- Regulation of Over-The-Top (OTT) services: TRAI has considered regulating OTT services (e.g., WhatsApp, Zoom) that handle communications data, ensuring they follow similar data protection and localization norms as traditional telecom operators. Such measures extend the scope of data sovereignty to platforms outside conventional telecom systems.
- Consumer data protection: TRAI mandates telecom operators to adopt stringent cybersecurity measures to protect consumer data against breaches. Telecom providers must ensure data is stored and processed securely within Indian jurisdiction.
In summary, these laws help to maintain data sovereignty in India. The concept of data sovereignty is one of global interest, as most countries seek data sovereignty compliance for businesses operating within their borders. In the next section, we shall review Indian cross-border data transfer requirements.
Indian cross-border data transfer requirements
India’s approach to cross-border data transfers emphasizes data security, sovereignty, and compliance with national regulations. Key frameworks outline stringent conditions for transferring personal and sensitive data abroad. These measures ensure that data remains protected, whether stored locally or shared internationally.
- Requirements under the DPDP Act
Personal data can be transferred to countries or regions offering adequate data protection standards. The regulatory agencies must acknowledge these countries as having adequate data protection standards. These countries are evaluated based on factors like privacy laws, enforcement mechanisms, and reciprocal arrangements. The government retains the right to modify or restrict transfers for reasons such as national security, public order, or sovereignty concerns.
- Requirements under the Reserve Bank of India (RBI) regulations
Payment-related data must be stored exclusively in India. Cross-border transfers are allowed only for specific purposes, such as fraud detection or processing transactions initiated abroad, provided a copy of the data remains stored within India. This protects financial data sovereignty and ensures regulatory accessibility.
- Telecom Regulatory Authority of India (TRAI)
Requires subscriber information and telecom data to be stored domestically. Cross-border transfers are allowed only if they comply with national security and TRAI regulations.
- Health data
Proposed regulations under the National Digital Health Mission recommend localized storage of sensitive health data. If allowed, cross-border transfers must ensure data privacy.
In conclusion, adequate safeguards such as robust privacy laws, effective enforcement mechanisms, and reciprocity agreements must be in place for cross-border data transfer to happen in India. Indian organizations transferring data abroad remain responsible for ensuring that foreign entities handle the data securely and in compliance with Indian laws. Finally, Individuals must be informed about the purpose and destination of data transfers and must offer clear consent.
How to comply with data protection laws in India — InCountry’s approach
One of the biggest hurdles for businesses is meeting the data residency requirements, and let’s face it; India’s data protection laws can feel like a maze. From the DPDP Act to regulations by the Reserve Bank of India (RBI) and other sector-specific mandates, staying compliant might seem like an impossible task.
InCountry’s Data Residency-as-a-Service makes this easy. We store all your Indian business data locally, ensuring compliance while still giving you seamless access to the data from any of your global locations.
We understand that compliance doesn’t directly add to your profits—but non-compliance can cost you dearly. With InCountry, you won’t need to worry about navigating India’s evolving data privacy laws. Our solutions are designed to keep you ahead of the curve by ensuring full compliance with every necessary policy that concerns your business.
With InCountry, compliance becomes a breeze. We take care of the heavy lifting, so you can focus on growing your business without the distraction of worrying about audits, fines, or reputational risks. Let us handle your data residency, security, and compliance needs, while you concentrate on what you do best—running your business.
Want to make compliance stress-free? Reach out to us today, and let’s craft a data protection solution tailored to your business in India.