India to review data storage rules that irked U.S. tech
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[June 18, 2019] By
Aditya Kalra and Manoj Kumar
NEW DELHI (Reuters) - India will examine
concerns raised by foreign technology companies around stringent rules
to store data locally, the government said on Tuesday, an issue that has
upset firms such as Mastercard and also irked the U.S. government.
The decision to review the rules comes at a time when trade tensions
between India and United States have risen. India imposed higher tariffs
on some U.S. goods on Sunday, following Washington's withdrawal of key
trade privileges for New Delhi.
On Monday Commerce Minister Piyush Goyal and leaders of technology
companies discussed several federal plans in the works to push for more
stringent data rules.
The Reserve Bank of India (RBI) last year mandated foreign payment firms
must store their payments data only in India to allow supervision.
The central bank representative who attended the meeting "assured the
industry representatives that the Reserve Bank of India will look into
this", a statement by the commerce ministry said.
A lobbying effort by Mastercard, Visa Inc and American Express Co to
dilute or reverse the central bank order has failed previously, Reuters
Mastercard CEO Ajay Banga joined Monday's meeting via video conference,
the government statement said.
India wants more stringent data storage rules so it can better access
data and conduct investigations when the need arises. Technology
companies argue the rules would force them to change their business
models, hurt planned investments and raise costs.
U.S.-India trade groups as well as top U.S. officials have expressed
concerns around such rules in the past.
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"We'll also push for free flow of data across borders, not just to help American
companies, but to protect data and secure consumers' privacy," U.S. Secretary of
State Mike Pompeo said last week ahead of his visit to New Delhi this month.
Other than RBI rules, India has also drafted an overarching law on data storage
which calls for all personal data determined to be critical to be processed
locally. The government will be the one to determine categories of such data.
Technology companies on Monday requested minister Goyal to ensure the law should
have more clarity around data classification and he assured them that the IT
ministry would address those concerns, the government statement said.
The government will take companies' suggestions "towards building a robust data
protection framework that will achieve the dual purpose of privacy and
innovation", it said, signaling the government could possibly go soft on
implementing the rules.
Concerns were also raised around a separate e-commerce policy that focuses on
data localization and improved privacy safeguards. They call for housing of more
data centers and server farms locally, measures bound to raise costs of
"Commerce Minister assured the e-commerce industry representatives that each and
every concern of the industry will be addressed," the government said.
The discussions around the e-commerce policy come after India implemented new
foreign investment rules from Feb. 1, forcing companies such as Amazon.com Inc
and Walmart's Flipkart to rethink their business strategy in the country.
(Reporting by Manoj Kumar and Aditya Kalra; Editing by Sanjeev Miglani and
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