THE PROBLEM WITH DATA NATIONALISM
The data of a country is a national asset that the government holds in trust.” So says the e-commerce policy draft released on February 23. Amidst the hyper-nationalism in the air, its title doesn’t seem out of place: ‘India’s Data for India’s Development’.
You’d think the headline should have something more to do with e-commerce. But data sovereignty has been the thread tying together new policies in the run-up to India’s 2019 general election, with a strident digital nationalism that I call Swadeshi 2.0. So this draft wasn’t a surprise: data is the new oil, it says pointedly.
Union IT minister Ravi Shankar Prasad has said that companies should not be allowed to colonise data or unleash ‘data imperialism’. India’s richest businessman Mukesh Ambani has spoken about how bad data colonisation was: India’s data must be controlled and owned by Indians, for data is the new oil and the new wealth. This policy draft emerged from a high-powered committee chaired by commerce minister Suresh Prabhu. Only a fifth of the internet industry was represented. Global companies were excluded: no Amazon, Google, Facebook, Twitter, PayPal, Amex, not even Flipkart (which is now owned by Walmart).
This is the second attempt at such a draft. The first was tentatively leaked last August, but was so protectionist that everyone protested, even, unusually, NITI Aayog CEO Amitabh Kant in a media interview. That leaked draft, unmarked for plausible deniability, was quietly jettisoned. Then came the December 26 shocker. While senior e-commerce executives were on vacation, the commerce ministry’s Department of Industrial Policy and Promotion (DIPP) issued a document abruptly revising the rules for e-commerce companies using foreign funds. There was no consultation. The changes blindsided Amazon and Flipkart, and impacted over half their business. They were given a month to comply—and there was no relenting on the February 1, 2019, deadline.
If the global giants lose, who gains? Traders’ body CAIT (Confederation of All India Traders) celebrated and, soon afterward, Mukesh Ambani announced Reliance’s plans to launch a mega e-commerce venture.
Remember data localisation, the RBI’s abrupt April 2018 mandate to store all financial data only in India? That story isn’t over. The RBI turned a deaf ear to pleas from global payment majors asking that it allow onshore mirroring of data, and an extension of the impossible six-month deadline. Paytm, and later Mr Ambani, applauded the hard stance. Now the RBI may be contemplating conditions that make even the processing of data outside India difficult. That’s a big hit on costs and safety for payment networks, whose antifraud platforms are global. And this, when a company like Visa doesn’t even get or store your name or address: the cardissuer bank does that. Don’t forget: America’s financial data is processed in India, part of our $126 billion software and services exports. How long would it take America’s mercurial president to tweet retaliation?
This is a global economy and a global internet, and India is a key beneficiary. This is no one-way street. Nasscom demands the free flow of data and talent across borders. For access to our market, India is raising barriers to data, balkanising global networks and the internet. The red herring of the evil, global data colonialist out to get our data, ignores the value that Google, Facebook, WhatsApp and a dozen others bring to India’s economy, starting from the internet adoption they drive. Our half-billion mobile broadband users didn’t buy their smartphones for government apps. Pushing global digital majors to a corner with an eye on the elections (and freeing up space for domestic corporate giants) does damage to India’s digital economy and investment climate that is not easily reversible.
Are there real problems the government is trying to address? Sure. The need for privacy, consumer protection, lawful access to data. The need to protect small traders from the overwhelming firepower of global (and Indian) giants and their money. If it articulates the questions clearly, industry and other experts can find the answers.
The red herring of the evil, global data colonialist out to get our data, ignores the huge value digital majors bring to India’s economy