Predictability, not pressure, will build trust in India’s data protection

India’s digital economy needs secure-by-design safeguards, not deadline-driven reforms

India’s Digital Personal Data Protection (DPDP) framework will be judged not by how fast it is rolled out, but by how well it works on the ground. Recent proposals to sharply shorten already tight compliance timelines risk turning a serious governance reform into a rushed compliance exercise. For a digital economy as large, complex, and globally connected as India’s, data protection must be built carefully and securely — not enforced in haste.

This concern is amplified by the absence of a fully operational Data Protection Board. Without a functioning regulator, compressed timelines send a signal of uncertainty rather than stability. Investors and businesses value predictability and orderly implementation, especially in sectors that rely heavily on trust, data flows, and long-term capital.

Recent policy signals from the Union Budget further underscore the importance of regulatory coherence. The government’s proposal to provide a tax holiday for foreign companies offering global cloud services — subject to the use of Indian data centres and local reseller partnerships — reflects a clear intent to position India as a competitive global digital infrastructure hub. Such measures are designed to attract international capital, encourage localisation of digital infrastructure, and strengthen India’s role in the global technology value chain.

However, these forward-looking incentives must be complemented by regulatory stability. Accelerating data protection compliance timelines without adequate transition periods risks sending mixed signals to global investors evaluating India as a long-term technology and cloud infrastructure destination.

India’s digital ecosystem includes global technology companies, fast-growing Indian platforms, startups, MSMEs, and large digital public infrastructure systems. Many of these organisations operate across borders and already comply with global data protection regimes that emphasise proportionality, risk-based obligations, and phased rollouts.

Transition periods in such frameworks are not administrative niceties; they are essential tools that allow businesses to redesign systems, update contracts, and embed governance processes in a stable way. Whether it is a global tech company is impacted or an Indian startup, the effect is felt on the entire ecosystem, hence emphasis should be on doing it right for all.

When compliance timelines are compressed without sufficient clarity on sequencing and scope, the risk is not merely delay. It is weak, fragmented, and fragile implementation. This becomes evident when one looks closely at some of the specific obligations proposed under the DPDP rules.

Take the requirement for mandatory one-year data retention. Organisations would need to retain personal data, traffic data, and system logs for a full year to enable lawful State access. Advancing compliance from 18 months to just three months would require a fundamental redesign of existing data systems — something that is neither simple nor quick.

Most global companies follow data minimisation principles, retaining data only for as long as it serves a clear business or security purpose. Browsing data for logged-out users is often stored for 30 days or less, while system logs are kept only for short operational needs. A blanket one-year retention rule across all categories would force companies to build new storage infrastructure, rework automated deletion processes, and significantly enhance security controls to protect much larger volumes of sensitive data.

These are not minor tweaks. They involve substantial engineering effort, high infrastructure costs, and ongoing security expenses. For smaller firms and startups, these costs could be especially burdensome.

The challenge does not end with retention. Once the one-year period expires, organisations must ensure timely and co-ordinated deletion of data across multiple internal systems and external processors. This requires precise tracking of data lifecycles for each user and data category, as well as seamless co-ordination with vendors and partners.

Designing and running such end-to-end data lifecycle systems is complex and time-consuming. Expecting companies to build and operationalise them within sharply reduced timelines is unrealistic, and risks compliance failures.

Shortened timelines also threaten the effectiveness of more advanced safeguards such as data protection impact assessments (DPIAs) and audits, especially for Significant Data Fiduciaries (SDFs). These tools are meaningful only after basic systems such as consent management, security controls, and breach response mechanisms are fully operational. If forced too early, the DPIAs and audits risk becoming box-ticking exercises rather than genuine accountability mechanisms.

There is also a practical capacity constraint. India currently has a limited pool of independent data auditors with the technical expertise required to assess complex digital systems. Accelerated timelines could create bottlenecks, inconsistent audit outcomes, and compliance uncertainty, disadvantaging Indian firms competing globally.

Data localisation requirements add another layer of complexity. Certain categories of personal and traffic data may need to be stored and processed exclusively in India, as determined by a government-appointed committee. Reducing the implementation timeline for these obligations from 18 to 12 months would impose significant burdens, particularly when the scope of data subject to localisation has not yet been defined.

Global businesses rely on shared infrastructure for security, analytics, fraud prevention, and customer support. Localising data would require major restructuring of systems, investments in local data centres, and redesign of backend processes. Without clarity on scope, companies cannot even begin to plan effectively.

Ultimately, strong data protection depends on realistic transition periods. Durable compliance is built through clarity, sequencing, and time — not compulsion. Retaining the originally notified timelines would give both regulators and industry the space to implement safeguards properly, strengthen accountability, and avoid unnecessary disruption.

If India wants to be a trusted, innovation-led digital economy, it must prioritise effective implementation over regulatory speed. Data protection should be secure by design, not rushed by deadline.

Lloyd Mathias is a business strategist and independent director. X:@LloydMathias.

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.