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US Tech Body Opposes India’s Bid For Data Localisation

Information Technology Industry (ITI) Council, a US-based global lobby body for technology companies, said that India’s mandate on data localization could prove detrimental to tech companies in more than one way, and also opposed the government’s bid to force social media apps such as WhatsApp to allow traceability of the origin of certain messages.

“When forced data localization is implemented it can cost companies 30-60 per cent more. A lot of big global companies can probably absorb that but can Indian start-ups afford that? It’s likely that start-ups and small businesses will struggle to absorb the increased costs for data services when data is forced to be stored locally,” said Cody Ankeny, senior manager of policy, ITI at a press briefing.

The Draft Personal Data Protection Bill, 2018, which mandates storing of critical personal user data within the territory of India, or data localization, is likely to be tabled in the winter session of Parliament. Multinational companies have previously also opposed India’s moves on data localisation, saying it will drive up costs and restrict cross border information flow.

“In addition, cloud services have multiple data centres, so if one goes down, we can rely on the other. But if everything is stored in India and it goes down, how do we manage? Another factor is the risk element. If everything is stored in one centre, one knows where to look at; whereas in a cloud, data could be anywhere,” Ankeny said.

Encryption V/s Fake News

ITI also opposed India’s move to force social media platforms such as WhatsApp on traceability, or helping law enforcement agencies trace the origin of messages which lead to criminal activities such as mob lynchings.

The social intermediary guidelines, which are expected to be released by the Ministry of Electronics and Information Technology (MeitY) by January 2020, proposes that all tech companies must find a way to trace the source of unlawful content and provide information to government within 72 hours. WhatsApp has pushed back on this demand, saying it would fall foul of its privacy norms and it technologically unfeasible.

“The government mandating a back-door access to users’ social media is not a good idea. Encryption services are very important, for example, in financial services. We have seen WhatsApp is suing the NSO group who is rumored to have made back door software for the government,” said Jason Oxman, CEO of ITI.

ITI is an industry body which aims to develop policies, standards and regulations across governments to support growth for global technology companies. Accenture, Amazon, Facebook and Google are some of the major member companies of the organization.

Digital Taxation

Oxman also opposed any country specific rules around digital taxation, popularly known as Google Tax in some circles.

“Our view on digital taxation is very simple. A country specific solution is not ideal. We came out very strongly against what France was doing because it departed from stable, sustainable international tax policies and increased the likelihood of global tax policy fragmentation,” Oxman said.

ITI supports OECD in finding a global solution to digital taxation, he added.

In 2016, the government also imposed 6 per cent tax on advertisement revenue from Google. The equalization levy collected by the government called ‘Google Tax’ in FY19 is reported to be Rs 900 crore. Last week ET reported that the government had sought changes in the Organization for Economic Cooperation and Development (OECD) proposal on digital taxation, saying it would deny the country its proper share of taxes from multinationals.―India Finance News


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