ASSESSMENTS

To Stake Their Claim in India's Future, Foreign Tech Firms Will Play by New Delhi's Data Rules

Jul 10, 2019 | 10:00 GMT

An Indian visitor walks past a mural of social media logos in Bangalore.

An Indian visitor passes a mural depicting various social media logos, including that of Facebook, inside a building in Bangalore on March 22, 2018.

(MANJUNATH KIRAN/AFP/Getty Images)

Highlights

  • The increasing digitization of the global economy has led India to join a growing list of countries seeking to maximize their control over data generated within their boundaries in the name of sovereignty.
  • In doing so, the country's government recently proposed a data protection bill that would effectively force foreign companies to store in India any data on Indian citizens collected in India.
  • U.S. tech giants with a large stake in India's market, such as Facebook, have voiced their concerns with the localization rule, arguing that it would increase operating costs and hinder global innovation.
  • But in order to seize the largely untapped opportunities present in India's growing digital economy, foreign firms will ultimately have to jump through whatever hoops New Delhi puts in front of them. 

India's booming $200 billion digital economy has recently drawn U.S. tech giants into a heated confrontation with New Delhi over the core commodity of the digital age: data. In June, New Delhi's Ministry of Commerce met with officials from Facebook, Amazon, Google and Microsoft to hear out their concerns over a proposed policy that would require foreign companies operating in India to store data locally. In addition to inflating their costs, these companies worry the law would loosen their grip on the data generated by the billions of Indian clicks, taps and swipes taking place on their platforms. New Delhi knows it can't bring its digital economy up to speed on its own, and will seek to balance avoiding deterring foreign participation against protecting Indian data. Ultimately, however, outside players will be forced to abide by the Indian government's rules. ...

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