Date : 15/06/2023

Relevance: GS Paper 3 : Science & Technology

Key Words: Data Security, Right To Privacy, Personal Data Protection Bill, 2019.

Context -

Recently, Microsoft signed an agreement with the Government of Telangana to invest 15,000 crores to set up India's largest data center in Hyderabad.

What are Data Centers?

• Data center means a place where data or information is stored.
• In the era of information and technology, a large amount of data is generated by individuals and institutions. Storage, processing and distribution of these data require dedicated infrastructure.
• Data centers are built in a very large space.
• A large number of computer servers are used in data centers.
• These servers process a large amount of data and store information in their servers.
• Google Data Center is the largest data center in the world. Where the data of all the people using the Internet in the world is present.

Data Centers in India

• The data center industry in India has a capacity of 499 MW, most of which is concentrated in a few major cities.
• According to NASSCOM, India has 80 third party centers and is expected to see an investment of around $4.5 billion by 2025.
• The rapid growth in the digital economy has given rise to a vast potential for data centers in India.

Factors driving the demand for data centers in India

• Promoting Digital India
• Foreign investment on a large scale in the service sector
• Emphasis on data localization
• Demand Driven by Covid-19
• better fiber connectivity
• Growing IT Sector
• Increase in adoption of cloud services etc.

Related Informations

Some time ago the government withdrew the Personal Data Protection Bill, 2019. The government attributed this to the suggestions made by various stakeholders and the need for a detailed legal framework. In these suggestions, suggestions related to data localization and other subjects were prominent.

What is data localization?

Data localization laws are laws that determine the way data of citizens of the country is collected, processed, and stored. According to data localization rules in India, data of Indian citizens is stored in a center located within Indian territory. Storage is mandatory.

Why is data localization important?

• The importance of data localization was understood by the government to protect the financial and personal information of its citizens and to prevent foreign surveillance and to empower local governments and regulators to use the data at the time of need.
• Storing data at the local level helps law enforcement agencies use the information needed to detect a crime or collect evidence.
• With time increasing technology will play a vital role in eliminating crimes by relevance.
• Where data is not localized, investigative agencies have to rely on Mutual Legal Assistance Treaties (MLATs) to obtain information, resulting in delays in investigations.
• On-shoring global data can also create domestic jobs and skills in the areas of data warehousing and analytics, according to the Srikrishna Committee report.

Why are companies incapable of data warehousing and localization?

• High cost- The task of data localization is high cost for the companies as they have to bear many other physical and infrastructure costs including servers, UPS, generators, buildings and personnel.
• Infrastructure for Information Technology: Companies feel that India still lacks favorable conditions and basic infrastructure for Information Technology. This cost can range between 10% to 50% of the legal provisions for any large e-commerce merchant in India. Small companies providing services in India will find it difficult to comply with the norms.
• In fact one of the major objectives of data localization is also to boost the start-up sector in India. But the strict norms set by the Government of India can make it very expensive for small companies which will not be possible to meet the objective of the government.

Conclusion

Policymakers must believe in the transformative power of Indian entrepreneurs to succeed globally and try to involve these entrepreneurs in decision-making about privacy and data flows.
Certain provisions from the EU's Data Transfer Model and the CLOUD Act should also be incorporated.

Source – Business Standard