Data localisation clause may hurt trade pacts between European Union and India, says Ralf Sauer

NEW DELHI: Even as India’s efforts to frame a comprehensive data protection bill is being appreciated, officials of the European Union are concerned over the element of data localisation that is expected in the legislation which is currently at the draft stage. In an interview to ET, a top EU official, who is currently visiting India, signalled that it could not just hurt businesses operating in the country but also the trade pacts being negotiated by the two countries.

Ralf Sauer, deputy head of unit – International Data Flows and Protection (Directorate – General for Justice and Consumers), European commission, said that the data protection bill and the clauses over data localisation were discussed during meetings with the ministry of external affairs and ministry of electronics and IT over the last two days.

“Of course, it is a question of concern from a trade perspective. It means that foreign operators might have to duplicate infrastructure to be able to hold a copy in India, it creates additional cost and it’s not just India which is the case but it is the tendency in number of countries in this region to think about data localisation, which will fragment operations of global players and make a habit to track the data and make it harder to compete. And it goes against the general philosophy of internet of seamless flow of data.”

He added that due to its insistence on data localisation, India could be at a position of “certain risk” since companies which are dependent on Indian market might turn to other markets referring to the country’s huge outsourcing industry.

“From the Indian perspective one of the things one should think about is one of the potential consequences. The EU-India trade relationships are very strong, a lot of data in financial, also business goes from Europe to India and this is not necessarily going to make it easier.”