As a part of its efforts to protect Indian customers data, the Indian Government has asked the US technology and e-commerce giant to urgently set up data servers in India. The Indian government is currently working on a strategy to protect the personal data of the customers and because of that only; the government has asked Amazon to start working on the process of setting its data server in India.
The Indian government has become more careful after the Facebook-Cambridge Analytica fiasco under which personal data of lakhs of Indian people was affected. Although, currently there is no law regarding data safety, the government is taking strong steps in the matter and recently, former Justice B N Srikrishna-led panel had submitted the recommendations and draft data protection bill to the government. The government is looking at the recommendations of the panel. The panel has suggested that a customer should be informed and his consent must be taken before processing his personal and sensitive data like sexual orientation, religious beliefs, biometrics, etc. In addition to that, a copy of such data must be maintained in India.
Also, Indian Economic Affairs Secretary, S C Garg said that foreign payment firms such as American Express can be allowed to store copies of customer data in India in order to keep a check on the issue of unbridled migration of the personal data of customers. In April, the Reserve Bank of India (RBI) had also asked all payment firms in the country to store all the data to ensure protection of customers' information.
Looking at these recommendations, the Electronics and Information Technology Minister Ravi Shankar Prasad has conveyed a message regarding data security and setting up of data servers in India to the Amazon India head Amit Agarwal. Prasad said that “All the foreign companies are most welcome to join the efforts made by us in India. He further added that what makes him concerned is the unconstrained migration of data, without the consent of Indian customers. Therefore, localisation of data servers in India and the consent of Indian customers for use of their data is equally important and should be dealt on priority basis.”
If this process of setting up of local servers is completed, then it will force e-commerce companies like Amazon to retain vast amounts of user data — generated by millions of subscribers to its platform — within the country, which will increase operational costs. It can also make an impact on the ability of the company to engage in hardcore analytics and mine user information in an effective way. Looking at this, Prasad said that they don’t want to make any problems for these foreign companies to operate successfully in India; they are only concerned about the safety and security of data of Indian customers, that is why, Amazon should have its server here in India and this initiative must be taken on priority.
At present, the Indian market is being dominated by e-commerce platforms like Amazon and Flipkart and after acquisition of major stakes of Flipkart by Walmart, both these companies are technically foreign companies. Every day, a lot of customers give their personal data on these websites and protection of this data is very important. It has to be protected and no data should be migrated abroad without the consent of customers.
However, the companies like Paytm, Microsoft and Google have come into favour of this step of localization of data servers. Let's see how Amazon will tackle with the issue. Reports suggest that Amazon has already started to work in the matter.