IT Minister Ashwini Vaishnaw proposes committee to oversee local data storage

To create a balanced framework for data security and industry operations, the government has introduced the Draft Digital Personal Data Protection Rules 2025. A central aspect of these rules is the establishment of a sectoral committee tasked with overseeing and recommending data localization requirements for different industries. This initiative is designed to enforce data protection measures while minimizing disruptions to business continuity.

The proposed panel will serve as a central decision-making body, collaborating with sectoral regulators and ministries to identify the types of personal data that must be stored within the country. IT Minister emphasized that this new structure will prevent conflicting mandates from individual sectors, ensuring a more consistent and cohesive regulatory environment. For instance, sectors like banking are already bound by the Reserve Bank of India’s strict data localization rules for financial data. The committee aims to extend a similar, organized approach to other industries.

The government's primary aim is to prevent sudden regulatory changes that could adversely affect industries dependent on cross-border data flows. By consulting stakeholders and introducing standardized guidelines, the committee seeks to address sector-specific concerns. The goal is to implement data localization measures in a way that targets only critical data categories while maintaining operational flexibility in areas such as technology, healthcare, and public services.

Data localization has been a contentious issue for global technology companies like Meta, Google, and Amazon, which have raised concerns about the added complexity and costs of complying with such mandates. The committee framework is intended to address these issues by providing a collaborative platform for industry feedback, while still ensuring national security priorities are met.

To ease the transition, the government is considering a two-year implementation timeline for industries to align their systems with the new rules. This phased approach is expected to help businesses avoid operational bottlenecks and reduce financial strain during the transition.

The Draft Digital Personal Data Protection Rules 2025 represent a shift from previous, more rigid data localization mandates. By fostering collaboration between the government and industries, the new framework aims to ensure data protection without stifling industry growth, marking a significant step forward in India's data governance strategy.