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    HomeBusiness InsightsGaining an In-Depth Understanding of the Digital Personal Data Protection Act: Rajeev...

    Gaining an In-Depth Understanding of the Digital Personal Data Protection Act: Rajeev Dutt, Swiss GRC

    In an increasingly digital world where personal data is a valuable asset, understanding data protection regulations is crucial for organizations. The Digital Personal Data Protection Act (DPDPA), which has been passed by the Government of India in the monsoon session last year, serves as a comprehensive framework designed to safeguard individual privacy rights and establish clear guidelines for data handling. In this context, Rajeev Dutt, General Manager MEA and APAC at Swiss GRC (software company specializing in Governance, Risk, Compliance and Data Protection), offers valuable insights into the key provisions of the DPDP Act and its implications for businesses operating in India. His expertise sheds light on how organizations can navigate compliance challenges while fostering consumer trust in their data practices, ultimately contributing to a robust and responsible data economy.

    TAM: Can you provide an overview of the Digital Personal Data Protection Act and its key provisions? Why is it essential for organizations operating in India to understand and comply with this legislation?

    Rajeev Dutt: I would like to explain the seven key principles of the data economy, which are also part of the DPDP Act:

    1. Rightful Usage: The data collected should be used lawfully, fairly, and transparently, respecting the rights of the individuals concerned.
    2. Data Reliability Period: The collected data must be accurate, free from duplication, and protected against breaches or unauthorized modifications.
    3. Data Retention Period: Personal data should not be stored indefinitely. Its retention must be limited to a fixed period, aligned with the original purpose of collection.
    4. Purpose-Driven Dissemination: Data should only be used for the specific purpose it was collected for, ensuring it is not misused or repurposed.
    5. Relevant Data Collection: This principle centers on data minimization, meaning that only the necessary and minimum amount of data required to fulfill the purpose should be collected.
    6. Authorized Collection and Processing: Adequate safeguards must be in place to prevent unauthorized collection or processing of data. These are often referred to as Technical and Operational Measures (TOMs).
    7. Accountability of Data Users: The individual or organization determining the purpose and means of processing personal data must be accountable for its proper handling.

    Let me divide the scope of legislation into two parts:

    1. Within the Territory of India

    – Where personal data is collected in digital form.  

    -Where data is collected in non-digital form and subsequently digitized.

    2. Outside the Territory of India  

    -If the processing of data is related to the offering of goods or services to data principals within the territory of India.

    In these scenarios, the legislation applies to organizations operating in India. Additionally, Indian companies conducting business in Europe must comply not only with GDPR but also with the local data protection regulations of each country, such as France, the UK, Germany, Switzerland, Italy, and more. Globally, over 40 countries have their own data protection regulations. Therefore, before entering new markets or during vendor onboarding, companies will assess how well organizations comply with these regulations and what measures they take to prevent data breaches. 

    Violations of data protection laws can lead to fines, penalties, and, more importantly, reputational damage.

    Regardless of the industry, these regulations apply to all corporations that collect personal data, such as employee or customer data. While certain clauses may provide exemptions, the compliance regime outlined in the act will still be applicable. 

    TAM: How do you foresee the implementation of the Digital Personal Data Protection Act affecting businesses across different sectors in India? Are there specific industries that will face more significant challenges or changes due to this legislation?

    Rajeev Dutt: The act is set to have far-reaching implications for businesses across various sectors due to its focus on regulating personal data processing and ensuring privacy protections for individuals. It introduces key provisions such as data minimization, obtaining consent, the rights of data principals (individuals), and strict obligations for data fiduciaries (entities handling data). Here’s how it may impact businesses across different sectors:

    1. Banking, Financial Services, and Insurance (BFSI): Given the sensitivity of financial data and the strict compliance requirements, these sectors will incur significant costs to ensure data protection.

    2. Healthcare: The sensitivity of health data, combined with the need for seamless data sharing in healthcare, will make compliance particularly challenging.

    3. Technology and E-commerce: Due to their data-heavy operations and reliance on personalized services, these industries will face some of the most stringent regulatory hurdles.

    4.Telecommunications: With the large volume of personal data processed and the critical need for data security, the telecom sector will also encounter significant challenges.

    5. Media and Advertising: Media companies and digital advertising platforms, which rely heavily on personal data for content personalization and targeted advertising, will be affected by the DPDP Act’s provisions on consent and data usage.

    6. Retail and Consumer Goods: Retailers, especially those with an online presence and loyalty programs, process large amounts of personal data for marketing and personalization. The DPDP Act will require them to modify their data processing practices.

    7. Manufacturing and Logistics: While the manufacturing sector may not handle as much personal data as other industries, any company processing employee data, customer data (e.g., through online sales or after-sales services), or business partner information will need to comply with the DPDP Act.

    TAM: In what ways do you think the Act will influence consumer trust and behaviour regarding data privacy? How important is it for companies to demonstrate compliance to maintain their customer base?

    Rajeev Dutt: To address the first part of the question:

    Consumer Trust and Behavior

    1. Increased Trust in Digital Ecosystems: The DPDP Act provides clearer guidelines on how personal data should be collected, processed, and stored, giving consumers greater control over their information. When people feel their data is secure and handled responsibly, their trust in digital services increases, potentially leading to greater adoption of online platforms.
    2. Behavioral Shift Toward Privacy-Conscious Decisions: As consumers become more aware of their rights, there may be a shift in behavior, with users selecting platforms and services based on their privacy policies. People may choose to opt out of services that do not comply with the DPDP Act or those perceived as careless with data security, driving the growth of privacy-centric alternatives.
    3. Empowerment of Consumers: The law provides individuals with rights such as data portability, the right to access, and the right to erase their data. As consumers become more aware and demanding about how companies manage their personal information, they will likely become more selective in engaging with businesses that prioritize privacy.
    4. Rise in Data-Related Complaints and Litigation: The DPDP Act empowers consumers to file complaints if their data is misused, which may lead to increased scrutiny from the public. Consumers will be more active in holding businesses accountable, potentially resulting in a rise in litigation and demands for greater transparency.

    Importance of Compliance for Organisations

    1. Enhancing Customer Experiences: Demonstrating compliance with the DPDP Act enables businesses to offer personalized services while ensuring privacy. Striking this balance is crucial to satisfying modern consumers, who expect tailored experiences without compromising their data.
    2. Competitive Advantage Through Transparency: Companies that proactively comply and clearly demonstrate their commitment to data privacy will gain a competitive edge. Transparency about data practices, privacy certifications, and regular updates on how customer data is protected will become key differentiators in India’s digital market.
    3. Maintaining Customer Loyalty: Compliance with the DPDP Act is essential for retaining consumer trust. If a company is found non-compliant or responsible for a data breach, it could severely damage its reputation, prompting customers to switch to competitors that prioritize data protection. Long-term compliance is, therefore, critical for maintaining and building customer loyalty.
    4. Avoidance of Penalties and Fines: The DPDP Act imposes substantial fines for non-compliance, which could impact a company’s financial health. Beyond financial consequences, companies may face public backlash and reputational damage if they violate the law.

    TAM: As companies work to align with the new regulations, what technologies or solutions do you believe will be crucial for ensuring compliance? How can businesses leverage these technologies to enhance their data protection strategies?

    Rajeev Dutt: To ensure compliance with the DPDP Act, businesses will need a multi-faceted data protection strategy supported by technology. Key technologies that can be leveraged to enhance these strategies include:

    • Tools that automate privacy policies, consent management, and data subject access requests (DSARs).
    • Data Protection Impact Assessments (DPIA) and Transfer Impact Assessments (TIA).
    • Implementation of Technical and Operational Measures (TOMs).
    • Data discovery and classification tools.
    • Data encryption.
    • Identity and access management solutions.
    • Consent management platforms.
    • Incident response and monitoring tools.
    • Compliance management tool.

    TAM: Looking ahead, how do you anticipate the Digital Personal Data Protection Act will evolve in response to emerging technologies, such as AI and machine learning? What should businesses be prepared for in terms of regulatory changes and data management practices in the coming years?

    Rajeev Dutt: As emerging technologies like AI and machine learning become more integrated into the economy and society, the DPDP Act is likely to evolve in response to new challenges and opportunities. Businesses should anticipate and prepare for the following developments in the coming years:

    Stricter Regulations on Data Processing for AI and Machine Learning: Similar to the upcoming EU Artificial Intelligence Act, stricter regulations governing AI and machine learning data processing are expected.

    Role of Data Protection Officers (DPOs) and Specialized Teams: The importance of DPOs and specialized teams will grow as businesses navigate increasingly complex data protection requirements.

    Collaboration with Global Frameworks: Companies will need to ensure compliance with global data protection frameworks in addition to local regulations.

    Introduction of Accountability Measures for AI Systems: There will be a heightened focus on accountability, with businesses required to ensure transparency and fairness in AI systems.

    Focus on Data Localization and Cross-Border Data Transfers: Regulations around data localization and the secure transfer of data across borders will become more stringent.

    Increased Focus on Data Security for AI Systems: As AI systems handle more sensitive data, ensuring their security will be a top priority.

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