By Elton Gomes
In a victory for the Reserve Bank of India (RBI), tech giant Google has agreed to comply with the bank’s data localization norms, but it has sought an extension of the deadline so that a proper mechanism can be put in place.
Google’s chief executive officer (CEO) Sundar Pichai recently met India’s IT minister Ravi Shankar Prasad at Google’s headquarters in Mountain View. The company has agreed to comply with all the norms and has sought time for the same till the end of December, a senior government official said on the condition of anonymity.
“Google has agreed to abide by all the RBI requirements but has sought around two months extra to comply,” a top official from the ministry of electronics and IT told the Economic Times.
The RBI had previously mandated that all Indians’ transactions data has to be stored in servers located in India, so that regulators can have “unfettered access”. The RBI sought to impose a deadline of October 15 to implement the rule, and gave companies a period of six months to comply with the rule that has been strongly criticised by foreign payment firms.
How has Google responded?
Google said that it was in favour of crossborder data flow as it made economic sense. “We maintain that cross-border data flows today are ubiquitous and an essential phenomenon for global economic activity and universal access to information. Soaring data flows generate more economic value and hence the socio-economic impact of restricting data flows must be thoroughly considered while framing any policy. There is a need to find practical and contemporary solutions to policy issues in line with global best practices. We have nothing to add at this point of time,” a Google spokesperson said, Live Mint reported.
What is the RBI’s data localization rule?
In April, the RBI had asked all payment companies operating in India to establish data storage facilities within the country in the next six months. Keeping in mind that the payments ecosystem in India had expanded, the RBI said that it needed “unfettered supervisory access” to the transaction data to ensure better monitoring of the entire transaction network. However, several sections of the industry heavily criticised the short deadline of six months.
Leading Indo-US business advocacy groups have raised the issue with authorities. Several groups have argued that restricting data flow across borders could put a country’s global competitiveness and economic growth in peril. More importantly, such a move might not necessarily help in securing data.
How has the rule affected other companies? How have they responded?
Previous media reports state that Apple halted its plans to launch a unified payments interface-based payments platform in India. The tech giant said that their main worry was the RBI’s data localization rule. The company also said that they had stalled plans after they rant into technical and design hurdles related to the flow of payments on UPI. “Apple will not launch payments in India yet. They are waiting to see how the regulatory landscape shapes up,” a person familiar with the development told the Economic Times.
In another example, Amazon’s plan to launch its own UPI payment service has hit a roadblock due to concerns of data storage in India. Other multinationals keen on entering the payments space in India are now waiting for more clarity on the RBI’s data storage rules. In addition to Amazon, Facebook-owned WhatsApp is also facing similar problems. “Both WhatsApp Payments and Amazon Pay have not gone live due to similar reasons,” a banker told the Economic Times on the condition of anonymity.
Elton Gomes is a staff writer at Qrius.