Foreign payments firms lash out at RBI for favouring Paytm, PhonePe, Ola wrt data localisation

Since the day RBI issued the diktat for foreign internet and financial companies to comply with newly formed data localisation policies, multiple US companies, apart from WhatsApp, have been fighting against it.

Recently, a meeting was held between RBI’s deputy governor BP Kanungo and top US financial companies. This meeting fueled the tension between the two parties on two grounds. One, due to the presence of iSPIRT in the meeting, and the other due to US companies’ demand to extend the deadline for data localisation.

Indian Software Products Industry Round Table (iSPIRT), is a body representing the interest of native tech firms such as PhonePe, Paytm, Ola and others. The US-India Strategic Partnership Forum (USISPF), felt that the involvement of iSPIRT reflected a stance taken by RBI where it favoured the native firms and was creating a “trade barrier” between countries.

USISPF CEO, Mukesh Aghi wrote a letter to Arun Jaitley, Finance Minister, on behalf of companies like Visa and Mastercard, regarding the same. Apart from these two, representatives from AmEx, Amazon, WU, had also attended the meeting.

Aghi feels that iSPIRT had no business being part of that meeting and the regulatory bodies inclusion of the group implied that they are taking the same data protectionism stance as the native tech think tank, and this was where the conflict of interest lied.

The companies have strongly put forth a demand for the extension of the deadline to comply by data localisation rules by another year. The reason mentioned for this is the time taken in setting up facilities and processing data.

Two days before the meeting two US Senators had also sent a request to Narendra Modi to soften the stance on data localisation as it represented “key trade barriers” between the two countries.

Joining the league, Naveen Tewari, CEO of InMobi expressed his views on it and said that India is losing this war over data, if not lost already, and data localisation is one of the strict actions that can improve the situation.

Truly, complying with Senators’ requests would mean that India is somewhere losing this battle.

However, the only ray of hope is that RBI is unlikely to extend the deadline, giving in to the pressure, and is planning to continue with its strict penal measures for those who don’t comply.

This development was first reported by ET.