Big win for Big Tech as Indian IT minister signals reversal of data sovereignty plan

Opponents want data to flow across borders for business and democracy. Privacy? They've heard of it

India's IT minister has hinted that a revised data protection law will drop a requirement for sovereign data storage – satisfying big tech companies, which have railed against onshore storage.

In an interview with Indian newspaper The Economic Times minister of state for electronics and information technology Rajeev Chandrasekhar said cross-border data flows will be permitted under the law.

The law is contentious because earlier this year the government scrapped a draft of the bill despite having spent two years trying to get it through parliament.

That draft included strict regulation of cross-border data flows.

Big Tech hates such restrictions. The Asia Internet Coalition – a lobby group that boasts Facebook, Google, Amazon, LinkedIn, Yahoo!, and other tech giants as members – devotes a section of its website to its opposition to restriction of cross-border data flows.

All the documents in that section suggest data should flow freely across borders.

A January 2022 letter [PDF] from the Coalition to Indian politicians and bureaucrats opposed the cross-border data flow restrictions in the dumped bill.

The Coalition's argument is that businesses need free cross-border data flows so they can take advantage of offshore SaaS and cloud services, and that asking companies to figure out what data must stay onshore and what data can be sent to the cloud is unproductive. The letter literally predicts "higher business failure rates … more expensive product offerings from existing market players" and a reduced ability for "Indian consumers to access a truly global internet and quality of services."

A month ago, the Coalition wrote a very similar letter [PDF] to Vietnam's government. Vietnam proposes to require onshore data storage and the Coalition argues that will hamper the development of its digital and real-world economies.

The Coalition is not alone in promoting such ideas. In August 2022 think tank The Carnegie Endowment for International Peace published a report suggesting India and South Korea should approve cross-border data flows to benefit their economies and demonstrate they are part of a bloc of like-minded democracies that allow data to flow freely.

Autocracies like Russia and China do not like sharing data describing their citizens offshore. Beijing recently implemented strong laws that limit sharing across borders. Moscow has done likewise.

Chandrasekhar told The Economic Times he now feels that "The internet is global and has data as its underlying basic element. For a robust internet innovation ecosystem, there has to be flow of data." The minister also reportedly said India's government will be satisfied that data can go offshore so long as it remains accessible to local officials and security standards are met.

All of which suggests that Big Tech's arguments have taken root in India – the world's second most populous nation and one in which the likes of Google, Amazon, and Meta are all fighting hard to expand their activities and scoop up more data describing citizens. ®