Data localisation: Govt directs Amazon to set up local servers in India

In an attempt to implement data localisation in India, the Indian government has first asked Amazon to set up local servers in the country. The government believes the move will check unbridled cross-border migration of data without users’ consent.

Talking to media, IT minister Ravi Shankar Prasad showed his concerns towards such migration of data and that without the consent of users. He said that localisation of servers in India and having an element of consent of Indians is important for usage (analytics) of the data.

The direction comes weeks after the Justice B N Srikrishna committee report which emphasised on data protection and the need for informed user consent while suggesting that companies maintain copies of data that they send abroad.

Experts, however, feel that the data localisation will increase the operational cost for Amazon and others; may also impact the ability of the company to engage in hardcore analytics and mine user information effectively.

Meanwhile, the Reserve Bank of India (RBI) is also asking for data localisation to fintech players. A few months ago, the RBI directed all payment players to ensure data related to payment system be stored inside the country within six months.

Besides, fintech platform Paytm is also lobbying hard for data localisation. Paytm had earlier said that no payment firm should be allowed to launch services in India if it does not have local servers in the country.

However, the RBI’s direction hasn’t gone down well many companies and lobby group like IAMAI.

Following the RBI mandate on data storage for digital payment players, the Internet and Mobile Association of India (IAMAI ) also called for a discussion with all the leading payments companies to debate over the ongoing matter.

US-based payment firms have been expressing concerns including huge investments required for having data storage capability locally and short deadline (six months) to meet the compliance

Amidst this, in absence of the Reserve Bank of India clarification on data storage, the global payment firms may not meet the apex bank deadline, which is till October.

With only two months left to relocate the data sets, it is not possible to do so, said a top executive of a payment firm.

The development was first reported by ET.