October 15, 2019

India Proposes Data Localization at RCEP for Security Reasons and for the protection of national interests

[ by Legal Era News Network ]


India has proposed to locate computing facilities inside the country for security and protect national interests amid the ongoing negotiations of the proposed Regional Comprehensive Economic Partnership (RCEP) trade agreement. This move has led to many companies ramping up their data center capacity in the country.

India said that only where it is a matter of legitimate public policy objective or necessary for protecting “security interests or national interests,” the participating countries may prevent the cross-border transfer of most pieces of information by electronic means, including personal information. In the financial services chapter of the ASEAN agreement in Vietnam, India agreed that financial services companies will be allowed to move and store data of Indians abroad.

Under the e-commerce chapter, India has asked for allowing data localization and for keeping the moratorium on imposition of import duties on electronically transmitted goods and services temporary as in the case of the World Trade Organization.

India came up with the new proposal to locate computing facilities inside the country on the ASEAN Package. While New Delhi supported data localization, 14 members of the 16-country RCEP, including ASEAN, opposed data localization.

India’s proposal for data localization is crucial as one of the April 2018 notifications of Reserve Bank of India (RBI) mandated system providers to ensure that the entire data relating to payment systems operated by them are stored in a system only in India. Furthermore, RBI clarified that a copy of domestic data can be stored abroad in the case of cross-border transactions.

Indian government has said that no party shall have recourse to dispute settlement for any matter relating to electronic commerce arising under any of the chapters/ any provision in this agreement. The Indian government has taken a rigid stand on the country’s data sovereignty till now.

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