India’s Policy Roadmap Toward a Digital Economy
India is increasingly being recognized as an emerging global center for digital innovation. The government’s target is for India to become a $US1 trillion digital economy — accounting for 25 percent of total GDP — by 2025–26. With more than a billion people online, India is the world’s second largest internet market — and global technology and digital companies are exploring business opportunities in India with major new foreign investments in semiconductor manufacturing, software and hardware and digital infrastructure.
Since its introduction in 2015, the Digital India program has supported extensive growth in the country’s technology and innovation development. It includes flagship initiatives like broadband highways, mobile connectivity, public internet access programs and improved e-governance, among others. The program aims to develop better digital infrastructure in rural areas and boost the digital economy, which is forecast to be a $800 billion market by 2030. With Digital India’s increased focus on e-commerce, digital skills and a robust tech start-up ecosystem, the government is looking to create strong legislative and administrative frameworks to realize this vision.
Below are five key pieces of legislation that will shape India’s move toward a digital economy.
1. The Personal Data Protection Bill 2019
Description: The Personal Data Protection (PDP) Bill was introduced in 2019 to regulate how personal data is to be collected, processed, used, disclosed, stored and transferred. The bill requires sensitive personal data — including financial information, biometrics and religious beliefs — be stored domestically and only processed abroad with the approval of a Data Protection Agency (DPA). The bill also mandates that national security and military data be stored and processed in India.
Concerns: A draft bill had provisions that allowed the Central Government to process personal data and conduct surveillance with no clear safeguards. Experts viewed this as an attempt to dilute the privacy rights of individuals. The bill would have made compliance difficult for startups and many provisions such as data localization and hardware authenticity clauses went beyond the remit of data protection. The bill also sought to create a policy framework for data usage which was deemed restrictive, especially for large internet companies.
Status: In August 2022, the Ministry of Electronics and Information Technology (MeitY) withdrew the PDP Bill 2019 in Parliament.
2. Digital India Act
Description: After withdrawal of the PDP bill, the government proposed a Digital India Act (DIA) to replace the Information Technology Act of 2000. The new law is expected to address regulatory challenges including anti-trust, data governance, regulation of intermediaries and their liabilities, consumer protections, ethical use of technologies, execution of privacy rights, deliberate propagation of misinformation, guidelines around women and children safety on the internet and a regulatory visibility and control over undesirable content on over-the-top (OTT) service platforms. The proposed law is expected to be modelled on similar regulations in Singapore, Australia and Europe’s General Data Protection Regulation (GDPR).
Concerns: The new law could have wide-ranging implications for larger technology companies including stronger focus on privacy, data localization for critical data, content moderation and surveillance on cyber bullying. The government would likely be empowered to temporarily block personal pages or handles if they were found to be spreading misinformation or hate speech. And it will give more autonomy to users over personal data collected by apps and may facilitate data sharing among startups to use for their products.
Status: The DIA is likely to be introduced and brought into discussion during the winter session of Parliament this year.
3. National Data Governance Framework Policy
Description: The National Data Governance Framework Policy aims to standardize and improve the government’s data collection and management and catalyze AI and data-based research while enabling a startup ecosystem. It would empower the India Data Management Office (IDMO) to enforce data security and notifying protocols — and establish the India Datasets Program to facilitate the regulation of personal data owned by both the government and the private sector.
Concerns: In the absence of a data protection authority under a law, anonymized data may not guarantee higher standards of privacy protection. Also, interoperability standards may be in question vis-à-vis data generated, processed, stored, or disseminated. Coordinating mechanisms between centralized authorities and the states must be determined.
Status: MeitY released the Draft National Data Governance Framework Policy in May this year, for public consultation. The draft policy is being finalized.
4. Guidelines for Influencer Advertising in Digital Media
Description: The Advertising Standards Council of India (ASCI) recently released guidelines for Influencer Advertising in Digital Media to help consumers identify when influencers are deriving benefits for promoting a product or influencing opinions and behaviors. The guidelines implement stringent disclosure requirements for influencers and place obligations on both advertisers and influencers to provide more transparency in influencer marketing.
Status: The guidelines now await the approval of the Ministry of Information and Broadcasting (I&B) and are expected to be released in the coming months.
5. The Indian Telecommunication Bill, 2022
Description: The 2022 Indian Telecommunication Bill proposes extending the scope of the term “telecommunication services” to include OTT services, satellite-based communication services, internet-based communication services, in-flight and maritime connectivity services and interpersonal communications. It seeks to exempt press messages intended to be published in India. However, the exemption will not be granted in case of public emergencies or in the interest of the public safety, sovereignty, integrity or security of India, friendly relations with foreign states, public order — or to prevent incitement to an offence.
Status: Ministry of Communications released the draft Bill in September 2022 for public comment.
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