Data privacy and protection - India is moving in the right direction: PwC-ASSOCHAM report

While India has taken constructive steps in moving closer to a state of data protection regime, it has to address data privacy and protection concerns promptly by formulating a law to benefit from the rise and spread of the data economy. Due to lack of comprehensive privacy regulation, Indian businesses are still beginners in data governance. On the other hand, developed economies where mature data privacy and protection laws exist are now undergoing revisions to align their regulations to the challenges and threats of the 21st century, highlights the whitepaper ‘Privacy in the data economy’ launched today by PwC India and ASSOCHAM.
Speaking on the occasion, Mr. Siddharth Vishwanath, Leader – Cyber Advisory at PwC India, said, “The spread of digital ecosystem in India where e-wallets, ride-sharing services, ecommerce, online entertainment services and social media are thriving is the direct result of digital disruption. But the absence of data privacy and protection law could lead consumers exposed to risks of their data being misused by organisations and data breaches on account of sub-optimal investments in security.”
The advent of digital imperative and internet penetration has triggered the growth of user generated data, which businesses -- with the help of technologies like the Internet of Things (IoT) and artificial intelligence -- are capturing, storing and analyzing. Mature economies are already on the path to provide consumers control on their data and prevent companies from misuse of the data. It is of paramount importance for jurisdictions with weak or no privacy regulations to address these concerns.
The whitepaper talks on why it is paramount to have a data privacy and protection law. It also highlights the growing recognition across the globe on need for privacy regulation. The paper finds India at a nascent stage in the overall maturity curve of the data privacy and protection state. But the report believes that India is moving in the right direction and is on the cusp of coming at par with the global standards. Even regulators of various data-sensitive industries such as telecom, healthcare and banking are becoming increasingly sensitive to the issue and have released guidelines, recommendations and papers to govern the use of data by organisations in these industries.
The key highlight of the paper is calling out the nuances that need to be addressed appropriately in order to establish a robust, transparent and enforceable regulation e.g. borderless internet, localization of data etc.
·       Borderless Internet: A single act of processing of personal data could very easily occur across multiple jurisdictions. To address this, not only should the regulation apply to entities (both public and private) within India but also entities outside India that process personal data of Indian citizens and residents.
·       Cross-border transfer of data: The regulation should clearly restrict transfers only to countries that offer an adequate level of protection and propose additional measures that need to be ensured for data transfers that do not meet such standards.
·       Accountability of data: Not considering this aspect in the data privacy and protection law may lead to inability in assigning absolute accountability to parties involved in managing and processing data. The regulation should go beyond the entity collecting the data directly from the end consumer (data controller). Both the data processor and data controller should be equally accountable for safeguarding data.
·       State interest vs individual’s privacy: While an individual’s privacy rights need to be protected, there are certain legitimate state interests for processing personal data, which may conflict with an individual’s privacy rights. The proposed regulations need to walk a tight line between right to privacy and national security considerations in order to strike the right balance and avoid excessive interference in citizens’ personal life without justification.
·       Localisation of data: The regulation should take a call on data localisation after considering a cost-benefit analysis between the enforcement benefits derived from data localisation and the costs involved pursuant to such requirements.
·       Impact on micro, small and medium enterprises (MSMEs): Stringent regulations may deter MSMEs due to the high costs and technology investments necessary for compliance. The regulation should take a risk-based approach and provide certain relaxations and exceptions for MSMEs under specific circumstances.
·       Penalties and compensation: The penalties should be commensurate with the size and nature of the business. Further, there should be a higher level of penalty for breaches of privacy that organisations willfully make or that result negligent security practices. There should be clarity around the quantum and nature of the same to the extent feasible.
The paper finally concludes that timely planning/action will help organisations continue their business as usual and enhance their business reputation.