An office in Gurgaon, Haryana | Representational image | Udit Kulshrestha/Bloomberg
Representational image | Udit Kulshrestha/Bloomberg
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One of the key challenges the new government will have to face after the Lok Sabha elections, be it a BJP or a Congress-led alliance or a federal front coalition, is data localisation and assuring foreign investors and states about the disruption associated with it.

RBI’s notification, Justice B.N. Srikrishna-led committee’s report, and the draft e-commerce policy have all called for data localisation without explaining how such a step will benefit India.

For a move that could define the future of domestic and international data in India, a cost-benefit analysis would be much appreciated by the industry, academia as well as civil society.

Cost, resources and security are fundamental to localisation. Its impact on ease of doing business and the start-up ecosystem as well as the geopolitical implications of other countries following India’s lead are yet to be understood in full. India needs to work out a comprehensive cost benefit model so that people can get a holistic picture of data localisation.


Also read: Governments must not shy away from taxing Google & Facebook for your personal data


Going forward, data and where it should be kept are set to be the most important issues in India’s technology policy.

The questions to ask are – why does it matter where data is stored and is data localisation a wise choice?

Data centres & their demands

Huge amounts of data are stored and processed at data centres. These data centres and server farms, regardless of their location, require big investment and resources to be set up and maintained. For example, it costs nearly $61 million to set up a data centre in Brazil (42 per cent more than in the US) and about $100 million to maintain it annually (more than twice what it would cost in the US). Bulk of the maintenance cost is spent in meeting energy and cooling requirements.

Global data centres, according to an article in Forbes, used roughly 416 terawatts (4.16 x 1014 watts) (or about 3 per cent of the global electricity supply) in 2016, nearly 40 per cent more than the entire United Kingdom. And this power consumption will double every four years.

Data centres also demand lots of water for cooling (and electricity generation) purpose. In 2014, American data centres collectively required nearly 165 billion gallons of water, a number that is expected to go up as server farms grow bigger and larger. And, this is before we even talk about the internet speed required for optimal functioning.


Also read: Indian worker may lose 11% of monthly salary if data localisation becomes law, study says


It only makes sense to establish server farms in locations where such resources are available in abundance and at cheap rates. Further, they should match the global security standards so that companies can ensure user trust in them.

Electricity and water are both commodities that India does not have in abundance. As of 2014, an estimated 300 million (30 crore) people in India did not have access to electricity, according to the IEA. The NITI Aayog estimates that 600 million (60 crore) people face a severe water shortage in India, and the situation will only get worse with the water demand being twice the supply by 2030.

In a scenario like this, it seems irresponsible to devote these resources to data centres when our people need them more.

Learning from global practices

Also, locating data on Indian soil may not necessarily give the government jurisdiction over it and is unlikely to raise the current security standards.

Even if localising data may protect it from international threats, chances are that this would make it more susceptible to domestic threats. There is also the argument that providing the government with access to people’s data could result in NSA-like programmes, which enable mass surveillance.

When we consider where data should be physically located, the cost of data centres, availability of resources, and how it impacts the security are important variables.

Countries like Canada and Australia have localised sensitive data, such as health records. This comes with the perceived benefit of having an additional layer of security when there are global concerns regarding increased foreign snooping in the wake of Snowden’s revelations.

However, localising data, when we don’t have jurisdiction over it, does not change who can access the information. This is not to say that localising data is necessarily an unwise decision, but to suggest that the reasons behind the decision are spelt out clearly.

The capital investment needed to achieve localisation cannot be accumulated overnight. The roadmap for how to keep data on India soil should be drafted in consultation with various stakeholders. It should also include the issue of how to identify and deal with entities that fail to localise.


Also read: India’s data localisation may not protect privacy but could damage businesses


The silver lining is that there is evidence of coherent intent across all the state actors involved in data localisation policy-making. What the process may lack in transparency is more than compensated in action.

As India aims to grow as a global leader in emerging technologies, where data is kept will be important. However, regardless of the solution that India ends up adopting, it needs to engage with all the stakeholders on this subject.

The author is a former scholar from the University of Westminster and is currently working as Project Manager at The Takshashila Institution. Views are personal.

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3 Comments Share Your Views

3 COMMENTS

  1. I am surprised that water is thought of as a consumable in the cooling process. Is it? Do data centres make steam and blow it off? Naive argument.

  2. The Takshashila Institution is supposedly an independent institute working on strategic affairs,policy and governance. While rightfully pointing out that we might be an energy/electricity deficit nation, instead of providing a stategic solution to this problem, the writer would rather have out private data stored in some other country. Do you think these MNCs and government’s in the west especially the USA and other allied nation’s don’t misue data?

    The steps we take now to secure our data is going to be the technological bedrock of our younger generation who might continue to be fooled and absorbed in social media to reveal intimate details, which otherwise one would have been reluctant to share even with their neighbors. The year the CIA ended the Lifelog program, Facebook was born. Do you have any idea this is legal data collection in garb of connecting people across the world?

    A last request to The Print – your overall content is highly appreciated vis-a-vis other mainstream media, but kindly don’t provide articles by people who are mouth pieces of the western agenda. If an opinion is well thought out and does benefit our nation, then I am all for it. But, people in supposed knowledgable institutions like the Brookings institute, Atlantic Council, the open society foundation, etc etc etc are the ones, whose adverse opinions have devasted and is devastating freedom around the world. We are so dumb that we think that Bill & Melinda Gates foundation is the beacon of hope. While they do provide some hope (only because of the funds they provide)..one should see through they their agenda driven actions related to Pharma,GMOs etc not only in India but especially in Africa. Alas! So few real/investigative journalists around these days to provide critical information and they would rather have the bait and click approach.

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