Start-ups seek separate data policy, don't want to be part of e-commerce

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With the government planning to secure all data related to finance and e-commerce in India, many start-ups fear that the Centre may also bring them into the e-commerce fold.

This, in turn, would make it impossible for them to process data abroad, according to LocalCircles, a social media and citizen engagement platform.

Under the much-awaited e-commerce policy, a number of proposals are around data protection and storing data onshore. The proposals are aimed at online e-commerce players, foreign banks and fintech firms for storing and processing all data in India. 

Start-ups fear that a blanket policy would affect smaller firms which need to process data abroad. In a letter to Gopalakrishnan S, joint secretary, ministry of electronics & information technology (MeitY), LocalCircles shared extensive inputs on how India should have a separate business or anonymised data policy, separate from the e-commerce policy.

On the data sharing front, according to LocalCircles, it is important to understand that many start-ups operate in new areas and bring about an innovation in product, technology intervention or service. Many of the cutting edge technologies are still developed overseas. As a result, many start-ups need access to overseas resources, expertise, tools and capital because not all of them are available in India. 

“An Indian start-up may need to open an office overseas and hire resources there to develop its product or service. In many cases, it will need to share aggregate data between resources and legal entities. Therefore, it is imperative that aggregate data of Indian start-ups be permitted to be shared with at least group companies that they have overseas. Similarly, if a foreign company acquires an Indian start-up, it may have plans to take the product developed and scale it further, globally. 

Hence, it would require access to aggregate data of the start-up,” said Sachin Taparia, founder and chairman, LocalCircles, in the letter.

He added that the government’s rights over the aggregate data of businesses should only be permitted in the event of a law-order, investigation or enforcement situations. 

“For routine matters, the government should not have access to either the aggregate data or the algorithms used by a business as such an access can be easily misused or compromised. Businesses spend significant amounts of resources to collect data, build products and services and a market. They must protect it to protect its value proposition and the business itself,” he said in the letter.

According to LocalCircles, India’s anonymised data policy must be such that it enables start-ups to benefit from aggregate data of the government, communities and large corporations. 

“A start-up’s social responsibility programme may be considered where every large corporation operating in India and above a certain revenue and profit threshold must be required to share aggregate data sets from the industry they operate in,” Taparia said in the letter.  




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