India is mulling the idea of requesting eCommerce and social media companies to only store customer data locally, which could impact the likes of Amazon and Facebook and its WhatsApp messaging service in the country.
According to a report in Reuters, the plan was laid out in an updated Draft National Policy. A source told Reuters the draft policy was floated around last week, and calls for more scrutiny of mergers in eCommerce so that even small deals are reviewed by India's anti-trust regulator.
Vinay Kesari, an independent Bengaluru-based lawyer who has advised global technology companies, told Reuters that the plan, if it went into effect, would undoubtedly “unsettle” the eCommerce industry “because it is at odds with the fundamental character of the internet."
Currently, Amazon and Flipkart dominate the eCommerce marketplace in India, while Walmart is getting into the market via its acquisition of Flipkart. Other eCommerce players in the country include Snapdeal, which has the backing of SoftBank, Paytm E-Commerce (which is backed by SoftBank and Alibaba Group) and ShopClues, which is backed by Tiger Global.
Reuters reported the government would move to offer incentives to store data locally in India. "Data generated by users in India from various sources, including eCommerce platforms, social media, search engines, etc.,” would need to be stored in India locally, the draft stated, noting that companies would have time to “adjust before localization becomes mandatory." The draft also said the government would have access to the data stored in India.
The draft policy comes as a government panel said last week that all the personal data of consumers in India should be processed there. That recommendation will go before Parliament, which is coming up with a data privacy law for the company.