Answer Writing Practice for UPSC IAS & UPPSC Mains Exam: Paper - IV (General Studies – III) - 04 July 2019

Answer Writing Practice for UPSC IAS Mains Exam


Answer Writing Practice for UPSC IAS & UPPSC Mains Exam


UPSC Syllabus:

  • Paper-IV: General Studies -III (Technology, Economic Development, Bio-diversity, Environment, Security and Disaster Management)

Q. “There is debate going on about the localization of data and in this process IT Ministry prepares to present data protection Bill in Parliament.” In this context, discuss, Should data be allowed to flow freely or localized at source? Discuss the pros and cons of each of these.

Model Answer:

  • Introduction
  • Importance of Data localization for India
  • What is happening at Global forum?
  • The way forward

Introduction:

Data localisation refers to the process of storing data within the borders of a particular country where the data was generated. India’s recent drafts and statements have strong signals for data localisation, which means that data of Indians, even if collected by an American company, must be stored and processed in India. Worldwide, the data flow debate is playing out at the World Trade Organisation (WTO) and G20.

What exactly about data laws are countries debating?

  • Data is stored in a physical space, like a file cabinet that can be the size of the Taj Mahal. Data is also transported across country borders physically, traveling through underwater cables that run as deep as Mount Everest and as long as four times the span of the Indian Ocean. Thirdly, just as oil is refined, data has to be processed to be useful. This means it is analysed by computers.
  • These aspects of data flows — where it is stored, where it is sent, where it is turned into something useful — determines who has access to the data, who profits off the data, who taxes the data, and who “owns” the data.
  • With these questions in mind, individual governments are developing their own domestic rules and negotiating with each other on a global stage, raising values of national security, economic growth, and privacy.

Importance of Data localization for India:

  • For securing citizen’s data, data privacy, data sovereignty, national security, and economic development of the country.
  • Much of the data from online sales, on ecommerce platforms is likely to be hosted and stored in US data firms.
  • The extensive data collection by technology companies, has allowed them to process and monetise Indian users’ data outside the country.
  • To curtail the perils of unregulated and arbitrary use of personal data.
  • With the advent of cloud computingIndian users’ data is outside the country’s boundaries, leading to a conflict of jurisdiction in case of any dispute.
  • Data is a digital transactions footprint. During war or hostilities, data centres could be switched off. Such scenarios are pushing countries towards local infrastructure.

In case of India:

  • Data localisation will help Indian law enforcement agencies access data.
  • RBI circular says that, it is important to have unfettered supervisory access to data stored in India.
  • Localisation will help law enforcement access the data. Currently, India has to use “mutual legal assistance treaties” (MLAT) with the US to get the data of Indians that are controlled by American companies.
  • By requiring a copy of the data to be stored in India (data mirroring), the government hopes to have more direct control over these companies, including the option to levy more taxes on them
  • Recently lynching across the country were linked to WhatsApp rumours and in this context, localisation of data assumes significance.
  • It gives security against foreign attacks and surveillance. Domestic companies support data localisation citing examples of China and Russia.
  • Data is the new oil, data is strategic and foreign entities could cripple India in event of war or sanctions.
  • India’s data localisation push can give rise to new business opportunity.
  • India is an ideal location for lower cost of operations and availability of quality talent.
  • National wealth creation relies on in-house data storage.
  • It champions domestic innovation.
  • Massive amounts of data generated by cities can be used to improve infrastructure and transport systems as Singapore has done.

Data localization is not needed due to:

  • It will create domino effect of protectionist policy and other countries may also follow it. This leads to fragmentation of internet.
  • It may affect India’s young start-ups that are attempting global growth.
  • It may affect big firms like TCS and Wipro because they are processing foreign data in India.
  • Even if the data is stored in the country, encryption keys may remain out of reach of national agencies.
  • It can act as “barriers” to expansion of services in India, impacting not only consumers but also growth of Indian payments market.
  • Infrastructure in India for efficient data collection and management is lacking
  • Others caution that these laws could bring increased state surveillance, like India’s draft intermediary rules that would require WhatsApp to change its design to proactively filter messages.

What is happening at Global forum?

  • Trade tensions worldwide are escalating, giving the data flow debate new relevance at the WTO and G20.
  • WTO member countries are negotiating rules about e-commerce, which is the buying and selling of goods and services online. Digital trade contributes more to global GDP than physical trade. India is one of the fastest growing markets, with e-commerce expecting to reach $1.2 trillion by 2021.
  • These laws raise questions about where companies can store, process, and transport data about transactions. In December 2017, a group of 71 WTO member countries, including the US, published a joint statement that marked the first large impetus to broaden e-commerce negotiations to the data flow debate. While other members like the European Union have joined since then, India has not joined this group.
  • In their proposals, the US and the EU have called to prohibit customs duties on online transactions while China and Pakistan have called for allowing them. The US has also recommended not having overly burdensome data standards nor localisation requirements, while the EU wants data localisation requirements.
  • From the G20 meeting in Tsukuba on June 8 and 9, the Ministerial Statement on Trade and Digital Economy championed cross-border flow of data. A principle titled “Data Free Flow with Trust” (DFFT) — supported by US, Japan, and Australia — is expected to be a significant talking point at the upcoming G20 summit.

The way forward:

  • There is an urgent need to have an integrated, long-term strategy for policy creation for data localisation.
  • Devising an optimal regulatory and legislative framework for data processors and data centres operating in the country.
  • Adequate infrastructure in terms of energy, real estate, and internet connectivityalso needs to be made available for India to become a global hub for data centres.
  • Adequate attention needs to be given to the interests of India’s Information Technology Enabled Services (ITeS) and Business Process Outsourcing (BPO) industries, which are thriving on cross border data flow.
  • Data needs to be shared with start-ups so that they can have a level playing field in offering innovative services with large and often global data companies.

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