In an increasingly digital economy, data is the new oil — and protecting it has become a priority not just for organizations, but for governments worldwide. India, home to one of the largest online populations, has recognized the critical importance of cybersecurity and data governance. With the implementation of the Digital Personal Data Protection Act (DPDP) 2023, and other sector-specific laws, India is shaping a robust framework to regulate how data is stored, used, and transmitted.
In this blog, we dive into the key legal requirements surrounding data storage, usage, and transmission in India, and what organizations need to be aware of to stay compliant.
1. Legal Framework Governing Cybersecurity and Data Protection in India
The legal framework is primarily shaped by:
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The Information Technology Act, 2000 (IT Act) and its amendments
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The Digital Personal Data Protection Act, 2023 (DPDP Act)
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Sector-specific guidelines (RBI for banks, SEBI for securities markets, IRDAI for insurance, etc.)
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CERT-In Guidelines for incident reporting and cybersecurity practices
2. Data Storage: Local vs. Cross-border Requirements
Key Considerations:
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Data Localization:
While the DPDP Act does not explicitly mandate localization, it empowers the government to restrict the transfer of personal data to certain countries, based on national security or public interest. -
Sensitive Data Storage:
Under the IT (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, sensitive personal data must be stored securely with adequate safeguards. -
Sectoral Mandates:
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RBI’s Data Localization Norms (2018): All payment system data must be stored only in India.
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IRDAI & SEBI have also issued data storage mandates for their regulated entities.
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Best Practices:
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Maintain clear data maps and classify data based on sensitivity
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Use secure, encrypted databases with access controls
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Store logs and backups securely, with proper retention policies
3. Data Usage: Consent and Purpose Limitation
Key Principles under the DPDP Act:
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Lawful Use: Data must be collected and processed only for specific, clear, and lawful purposes
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Consent-Based: Personal data processing requires explicit consent, unless covered under “legitimate use” clauses
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Minimalism: Only the data necessary for the stated purpose should be collected
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Data Principal Rights: Individuals (data principals) have the right to access, correct, and erase their data
Red Flags to Avoid:
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Collecting data without a clear purpose
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Failing to inform users how their data will be used
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Sharing or selling data without consent
4. Data Transmission: Security & Cross-Border Transfers
Security Obligations:
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Encryption & Integrity: Data in transit must be encrypted and protected from tampering
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Secure Protocols: Use of HTTPS, VPNs, and secure APIs is critical
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Incident Reporting: CERT-In mandates organizations to report cyber incidents within 6 hours of detection
Cross-Border Transfers:
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Allowed under DPDP Act, unless the destination country is restricted by government notification
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Organizations must ensure that adequate safeguards (e.g., contractual clauses, standard security measures) are in place
5. Penalties and Enforcement
Under the DPDP Act, penalties for non-compliance can go up to ₹250 crore depending on the nature and severity of the violation. The Data Protection Board of India (DPBI) will oversee enforcement.
Under the IT Act, penalties include:
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Compensation for failure to protect data (Sec 43A)
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Criminal liability for hacking or unauthorized access (Sec 66)
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Jail terms and fines for identity theft, cyber terrorism, etc.
6. Final Thoughts: Staying Ahead with Compliance
With India’s data protection landscape evolving rapidly, businesses must go beyond just legal compliance. Proactive cybersecurity strategies, privacy-by-design frameworks, regular audits, and employee training are essential to managing risks and building trust with users.
If your organization deals with personal or sensitive data — especially across borders — now is the time to reassess your data governance policies and ensure alignment with Indian cybersecurity laws.
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