What is Data localisation? – Explained

Data localisation
  • Data localisation means storing data on any device physically present within the borders of a country where the data is generated.
  • It mandates that companies collecting critical data about consumers must store and process them within the borders of the country.
  • As of now, most of these data are stored, in a cloud, outside India.
  • RBI’s circular on storage of payment system data: In 2018, RBI had issued a circular wherein it directed all system providers to ensure that within a period of six months, the entire data relating to payment systems operated by them is stored in a system only in India. This covered not only card payment services by Visa and MasterCard but also of companies such as Paytm, WhatsApp and Google which offer electronic or digital payment services.
Rationale behind data localisation
  • Protection of citizens’ data: The main intent behind data localization is to protect the personal and financial information of the country’s citizens and residents from foreign surveillance and give local governments and regulators the jurisdiction to call for the data when required. News of social media giant Facebook sharing user data with Cambridge Analytica, which is alleged to have influenced voting outcomes, led to a global outrage and calls for data localisation.
  • National Security: Storing of data locally is expected to help law-enforcement agencies to access information that is needed for the detection of a crime or to gather evidence. Where data is not localised, the agencies need to rely on mutual legal assistance treaties (MLATs) to obtain access, delaying investigations.
  • Creation of jobs: Local storage of global data could also create domestic jobs and skills in data storage and analytics too, as the Srikrishna report had pointed out.
Criticism of data localisation requirement

Maintaining multiple local data centres may entail significant investments in infrastructure and higher costs for global companies, which is why they are not too supportive of this provision.


India has a stronger bargaining chip than most nations in pushing for data localisation — access to its billion-strong consumer market.

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