Data localisation

Indian Economy glossary

Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT

Meaning

Data localisation is a rule that data about a country's citizens must be stored or processed within that country's borders. Governments use it for security, privacy and easy access by law enforcement. It also keeps policy space, meaning the freedom to make their own rules. Critics, mainly the US and the EU, say it raises costs for firms and blocks "free data flows with trust". Data localisation is a major issue in digital trade talks.

Example

In April 2018, the RBI directed that payment-system data be stored only in India, so card and UPI companies had to set up local storage. The Digital Personal Data Protection Act 2023 is looser. It uses a negative-list approach: personal data may go to any country except those the government notifies as barred.

Don't confuse with

  • Data protection: data protection is about how personal data is handled and kept safe, wherever it is stored. Localisation is only about where data is stored or processed.

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