This had prompted swift opposition from Google, Amazon, and Facebook. The digital giants claim the move would entail huge cost overheads, burden businesses with unnecessary compliance, and cut India off from the global data movement system.
The report released on Thursday said data localisation
requirements could actually increase privacy risks, unless data is stored within multiple locations. “Cybersecurity concerns may be exacerbated by constraints on cross-border digital trade that limit the scale of cloud providers (thus, potentially impacting their ability to ensure appropriate investment in data safeguards) and by concentrating data in a few locations,” it said.
A large segment of the domestic industry, especially the information technology sector, is also against the move, arguing it will hit Indian players further. “Server localisation may increase overheads and complexities for small and medium enterprises, which they may not be ready for. Apart from the obvious fall in the ease of doing business, their access to the global trade system will also go down,” Berenice Voets, director of public affairs and policy at Hinrich Foundation, said.
Currently, the economic value of digital trade-enabled benefits to the Indian economy is estimated to be worth up to $35 billion. In the event of open cross-border data flow and storage, the report estimated the value to India’s domestic sectors to grow more than 14-fold to reach $512 billion by 2030.
Moreover, the total value of virtual goods and services enabled by the digital economy, including e-commerce, may see an optimal growth of 238 per cent to $197 billion, up from the current $58 billion. Open data flow will ensure this becomes India’s second-largest export sector, the report said.
“Issues such as imposing undue red tape on digital enterprises, restricting cross-border data flow and providing imbalanced copyright and intermediate liability regulations, need to be addressed,” the report said.