"India has proposed and promulgated several data localisation requirements that would serve as significant barriers to digital trade between the United States and India. These requirements, if implemented, would raise costs for service suppliers that store and process personal information outside India by forcing the construction or use of unnecessary, redundant local data centres in India ... [and] could serve as market access barriers, especially for smaller firms," the United States government said in its latest National Trade Estimate Report on Foreign Trade Barriers dated March 2022. The report also hits out at the Information Technology (IT) Rules, 2021, for being burdensome on US firms. The Indian government has been promoting data localisation on multiple fronts with the Reserve Bank of India leading the way for the financial sector and the Data Protection Bill proposing norms for all other sectors. While multiple companies and trade bodies have objected to these provisions, the US government's objections hold more sway and could bring about actual changes in policy. What are the US government's objections to the data localisation norms? RBI's norms in the financial sector: In 2018, RBI issued data localisation guidelines for all payment companies operating in India. As part of these guidelines, payment companies are required to store all information related to electronic payments by Indian citizens on servers located in India. As a result of these guidelines, Diners Club, American Express, and Mastercard were barred from issuing new cards in India. While the restrictions on Diners Club have been lifted, the…
