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Wipro Backs Govt Stand on Data Localisation; NASSCOM Says Rule Arbitrary

Wipro Backs Govt Stand on Data Localisation; NASSCOM Says Rule Arbitrary

Government released draft data localisation rules in December 2018

Draft calls for internet companies to store data in Indian servers

Intermediary guidelines significantly impact user’s rights over internet

Indian IT major Wipro has supported the data localisation requirements proposed by Ministry of Electronics & Information Technology (MeitY) in the draft of Information Technology Intermediaries Guidelines (Amendment) Rules, 2018.

These Draft Rules mandates internet companies (intermediaries) with more than 50 Lakh Indian users to have a physical presence in India by incorporating a company under the Companies Act. The draft also proposed that the intermediaries should have a registered office in India and a designated officer who can serve as a point of contact for coordination with law enforcement agencies.

Wipro said in its recommendation to MeitY, “We believe that this data localization requirement is crucial as it enables storing of information and data domestically especially sensitive and personal data and data that is generated and collected by operators of Critical Information Infrastructures which facilitates easy access and quicker remedial responses in case of occurrence of a cyber incident.”

The tech giant also backed its recommendation by citing the cyber security provisions of EU Member States, “Same requirement has been adopted by EU Member States, wherein the digital service providers are subject to their respective domestic Cyber Security Act and in compliance with the NIS Directive only if their main establishment is located within the territory of the concerned Member State, or have a representative appointed in the Member State in which they offer their digital services.”

Responding to the same draft of Intermediary Guidelines, the software lobby group, National Association of Software and Services Companies (Nasscom), expressed contrasting views to Wipro.

According to Nasscom, “The requirement to have a physical presence in India may act as a disincentive for platforms to enter the Indian market, and deprive Indians of access to foreign platforms.” Group mentioned that such a policy change would go against the ethos of a free and open internet. Which would result in unintended effect of reduced competition in the digital economy.

Group also added, the requirement to have a physical presence in India is likely to give rise to tax concerns for intermediaries which would eventually result in the end consumers bearing the burden of increased cost of doing business. Further commenting on the threshold to have a registered office, company said, “The threshold of fifty lakh users is arbitrary and devoid of any reasoning.”

In today’s digital era, online platforms are drivers of significant innovation and growth. Internet has provided the users with access to remarkable amount of  information and content through social networks, blogs, search engines, and video-sharing platforms. In addition to these benefits, internet has also come under fire for rampant spread of illegal content, fake news, child pornography and more, which in turn pose significant threat to cyber security of the citizens.

However the government’s attempts to build a regulatory framework around internet usage is being seen as an overreach on its part as policies such as Intermediary Guidelines, which govern intermediary liability for communications over internet has a significant impact on user’s freedom of speech and expression and privacy.