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Data-Wise: Why the world is debating data flow

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Why the world is debating data flow?

The IT Ministry is going to introduce a data protection bill in Parliament during the current session. Worldwide, the data flow debate is playing out at the World Trade Organisation (WTO) and G20.


Digital trade contributes more to global GDP than physical trade. India is one of the fastest growing markets, with e-commerce expecting to reach $1.2 trillion by 2021.

What is data?

Data is any collection of information that is stored in a way so that computers can easily read it. These days, most people refer to data to mean information about their messages, social media posts, online transactions, and browser searches.

What is big data?

Big data refers to the immense amount of data. Agencies collect, store and analyse this data to find patterns.

Why data is important?

  • This large collection of information about people’s online habits has become an important source of profits.
  • Consumer online activity can expose a lot about who they are, and companies find it valuable to use the information to target advertisements to them.
  • Governments and political parties have also gained interest in these data sets for elections and policymaking.

What exactly about data laws countries debating?

  • Data remains in a physical space, like a file cabinet. It moves acrossdata-wise-why-the-world-is-debating-data-flowcountry borders physically, traveling through underwater cables. Data is analysed by computers. These aspects of data flow — i.e. storage, movement, and analysis  — determine who has access to the data, who profit off the data, who taxes the data, and who owns the data.
  • With these questions in mind, individual governments are developing their own domestic rules and negotiating with each other on a global stage, raising values of national security, economic growth, and privacy.

 Where does India’s domestic policy on data stand?

  • India’s recent drafts and statements have strong signals for data localisation, which means that data of Indians (even if collected by an American company) must be stored and processed in India.
  • Along with a Reserve Bank of India directive to payment companies to localise financial data, the Ministry of Commerce’s draft e-commerce policy from February is currently in public consultation. The IT Ministry has drafted a data protection law that will be introduced in Parliament and has also framed draft intermediary rules that were leaked in December.

Arguments in favour of data localisation

These laws, broadly speaking, could require Facebook, Google, and Amazon to store and process in India information such as an Indian’s messages, searches, and purchases. In some cases, they restrict what type of data these companies can collect.

  1. It requires only a copy of the data to be in the country, which proponents say allow for a flourishing domestic economy of data centers and data processing by blocking foreign players out. This is why companies, like Reliance and  PayTM, usually support data localisation.
  2. The other argument from the Indian government is that localisation will help law enforcement access the data. Currently, India has to use mutual legal assistance treaties (MLAT) with the US to get the data of Indians that are controlled by American companies.
  3. By requiring a copy of the data to be stored in India (data mirroring), the government hopes to have more direct control over these companies, including the option to levy more taxes on them.
  4. The government also argues for data localisation on the ground of national security, to prevent foreign surveillance and attacks.

What are counter-arguments against data localisation?

  1. On the other side, the US government and companies want the cross-border flow of data. It would allow companies to store the data of Indians in the most efficient place in the world.
  2. Proponents of the free flow of data worry that if all countries begin to protect their data, it may backfire on India’s own companies that seek global growth.
  3. Others caution that these laws could bring increased state surveillance.

What is happening at the global forums?

  • Trade tensions worldwide are escalating, giving the data flow debate new relevance at the WTO and G 20.
  • A  group of 71 WTO member countries, including the US, published a joint statement that marked the first large impetus to broaden e-commerce negotiations to the data flow debate. In their proposals, The US has recommended not having overly burdensome data standards nor localisation requirements, while the EU wants data localisation requirements.
  • From the G20 meeting, the Ministerial Statement on Trade and Digital Economy defended the cross-border flow of data.

 How has India responded to these moves?

  • India submitted a document opposing any WTO e-commerce negotiations. India believes all nations should appreciate that the digital divide within and across nations is a serious impediment for developing countries to benefit from Digital Trade.
  • Capacity constraints in developing countries can no more remain a hurdle , with the timely support of training, and the creation of digital infrastructure. This is important, for facilitating a level playing field, in the digital economy, for all countries to take equitable advantage of data free flows.
  • Developing countries need time and policy space to build the deepest understanding of the subject and formulate their own legal and regulatory framework before meaningfully engaging in e-commerce negotiations.

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