Data localisation will lead to government control of user data, says expert

Financial Express, March 04, 2019

The draft e-commerce policy aims to restrict the cross-border flow of data generated through e-commerce platforms, social media, search engines or Internet-of-things (IoT) devices.

The draft e-commerce policy that aims to restrict the cross-border flow of data generated through e-commerce platforms, social media, search engines or Internet-of-things (IoT) devices would lead to government control over user data, said Founder Secretary General of CUTS International Pradeep Mehta. CUTS is a non-governmental think-tank doing research, advocacy and networking on trade and regulatory issues.

“In the globally interdependent world, you cannot do that. Keeping data in a central location, the government will have control over it. This doesn’t make sense. Data de-centralisation is the solution,” Mehta told Financial Express Online

In fact, e-commerce deals with transactions between businesses and customers whereas data is a tertiary issue. So why it has to be included in the draft e-commerce policy when there is already Srikrishna Committee report that will go before the next Parliament, said Mehta.

The report, which was submitted to electronics and IT minister Ravi Shankar Prasad in July last year, had said that all ‘critical’ personal data should be processed in India while firms will have to keep a copy of personal data in India. However, the term critical wasn’t defined.

On the other hand, Reliance’s chairman Mukesh Ambani in January had called for ownership of data and control to rest within users instead of companies.

“In this new world, data is the new oil. And data is the new wealth. India’s data must be controlled and owned by Indian people and not by corporates, especially global corporations,” Ambani said at the Vibrant Gujarat Summit.

“Eventually you can control whatever is visible rather than worrying about whether you are going to manage everything or not. I don’t see any problem in data being in India,” said consulting firm Wazir Advisors Founder and Managing DIrect Harminder Sahni.

Favouring Local Giants

Mehta also argued that revised FDI policy doesn’t allow foreign competition to prevail by imposing restrictions on FDI-backed companies instead of also applying the regulations on non-FDI backed local retailers Reliance. Ambani had also announced plans of launching its e-commerce venture during the Gujarat summit.

“If the government says that nobody should favour sellers then I am happy about it. Right now there is one set of rules for companies with FDI and another for likes of Reliance, Biyani, Birla etc.,” India Quotient co-founder Anand Lunia had told Financial Express Online earlier.

The revised rules issued last month prohibits online marketplaces, funded by foreign investment, to sell goods of vendors in which they have equity stakes and to have exclusive marketing tie-ups.

It also said that the goods of a vendor will be “deemed to be controlled by an e-commerce marketplace if more than 25% of purchases of such vendor are from the marketplace entity or its group companies.”

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