What the judgment of the Supreme Court in Vishaka v. State of Rajasthan (1997) did not do; what even the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“Act”) did not do; the #MeToo movement has done – which is to wake up every corporate entity in India to take sexual harassment as a serious malady and not merely a thorn in its side.

The recent spurt of awareness programmes at workplaces; hasty formulation of complaints processes; hushed but expedited setting up of Internal Complaints Committee (“ICC”), are all welcome momentum in the inertia-ridden corporate world.

Not surprisingly, the natural knee-jerk reaction to anything disruptive and the consequent overreach have also already reared its head. Many a corporate romance does end up in a lifelong relationship and even if they don’t, it is still a consensual relationship between adults who may decide the course of such events. A query at a recent panel discussion on #MeToo and corporate romances highlighted the fear factor that now permeates corporates and male colleagues alike.

The larger threat to women appears to be the possibility of employers shunning them, as a risk element in workplaces or worse mollycoddling women employees in their fear of any “stigma” impacting the corporate entity. Equally unfortunate that many companies appear to have resorted to play it safe than be sorry by “banning” romances or at least subjecting them to monitoring. Apart from policies mandating disclosure of personal relationships amounting to blatant violation of privacy, it also brings in the “chilling effect” at workplaces.

Knowing the Laxman Rekha for sexual harassment is expedient to avoid such excessive or regressive actions.

Sexual harassment in the eyes of law: The Act sets out an inclusive definition for sexual harassment but the Criminal provisions under S.354A Indian Penal Code is limited to specific actions. Of these, unwelcome physical contact and advances, explicit sexual overtures, demand or request for sexual favours and showing pornography against the will of a woman carry a more stringent punishment of three years, as opposed to making sexually coloured remarks, which is punishable with one year imprisonment.

In addition, a person in a fiduciary relationship abusing his authority to induce or seduce a woman in his custody or charge or even present in the premises to have sexual intercourse, which may not amount to rape is also an offence punishable under S.376C IPC with six years imprisonment.

Against this, the Sexual Harassment Act provides an open-ended inclusive definition. Implied or explicit promises of preferential treatment or threat of detrimental treatment including in present or future, in employment; interference with her work; creating an intimidating, offensive or hostile work environment; humiliating treatment likely to affect her health or safety are all acts amounting to sexual harassment under the Act.

Corporate policies for internal penal actions may, therefore, be more stringent than those under IPC for initiation of criminal prosecution. These, however, would have to be explicitly set out in the human resources policies to support such initiation of action. Any corporate action against culprits would have to be preceded by an inquiry by ICC.

Women — not just employees — protected: Corporate policies need to take into account that it is not just women employees but “any woman” present at a “workplace” who is protected under the Act. The Act is gender-specific to “women”, as victims but is gender neutral with respect to the perpetrator, i.e., complaint against a woman may be entertained for commission of sexual harassment against another woman, subject however to other provisions being applicable.

Workplace &amp; The Act: In today’s hyper-connected world every place in effect would become a workplace. The Sexual Harassment Act itself expands the workplace not just to the office premises but also to places visited by employees in the course of employment including transportation provided by the employer. It would therefore include even online workspaces.

Purpose &amp; its implementation: With the application of the Sexual Harassment Act extending to any woman present in a “workplace”, enforcing excessive or possibly restrictive protections to women employees is clearly misplaced. Similarly, placing employees in different hotels or mandating travel by co-workers on different vehicles reeks of segregation processes in schools and colleges. If not anything else it certainly demonstrates abject lack of trust. Most significantly, none of these actions, including restraining or restricting office romances or travels together or other regressive processes is likely to protect against commission of an act of sexual harassment. 
 
Short of restricting all forms of communication between the two genders, which clearly is not just impractical but impossible, there is no way for corporates to create Chinese walls to protect against complaints of sexual harassment – for a man may commit an offence against a woman employee (yes the law is gender specific) or against a non-employee. If the act is committed at a “workplace”, which could even be a coffee shop where a meeting is being held or even during a conference call, the ICC of the entity is required to entertain the complaint.

It is imperative for corporates to understand that the law is not “against” them. Nor is it intended to become yet another restrictive and regressive step for women. It is intended as a facilitator for women to freely venture out and be part of the workforce. The law is for and about women. Experience has taught us that any attempt at keeping statistics “clean" will only defeat the purpose behind an enactment.

Registration of a complaint with the ICC is not a blot on a corporate entity or a stigma. On the contrary, it reflects the robustness of its sexual harassment policies and implementation. It is not important to protect adults against each other especially against their natural urges or choices. The decisions of the Supreme Court from the Privacy judgment to the recent strike down of adultery as a Criminal offence demonstrate the need to protect an adult’s consensual choice. 
 
The need of the hour for companies is to, therefore, put in place effective processes for undertaking complaints of sexual harassment boldly and transparently and to ensure speedy and just disposals. The measure of a company’s worth or safe workplace may probably now depend not on a “clean slate” with no complaints registered but of effective, speedy and conscientious handling of sexual harassment complaints, which is a more plausible measure. 
 
(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-metoo-for-corporate-world-2686760">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL) 
&nbsp;

What the judgment of the Supreme Court in Vishaka v. State of Rajasthan (1997) did not do; what even the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“Act”) did not do; the #MeToo movement has done – which is to wake up every corporate entity in India to take sexual harassment as a serious malady and not merely a thorn in its side.

What the judgment of the Supreme Court in Vishaka v. State of Rajasthan (1997) did not do; what even the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“Act”) did not do; the #MeToo movement has done – which is to wake up every corporate entity in India to take sexual harassment as a serious malady and not merely a thorn in its side. The recent spurt of awareness programmes at workplaces; hasty formulation of complaints processes; hushed but expedited setting up of Internal Complaints Committee (“ICC”), are all welcome momentum in the inertia-ridden corporate world. Not surprisingly, the natural knee-jerk reaction to anything disruptive and the consequent overreach have also already reared its head. Many a corporate romance does end up in a lifelong relationship and even if they don’t, it is still a consensual relationship between adults who may decide the course of such events. A query at a recent panel discussion on #MeToo and corporate romances highlighted the fear factor that now permeates corporates and male colleagues alike. The larger threat to women appears to be the possibility of employers shunning them, as a risk element in workplaces or worse mollycoddling women employees in their fear of any “stigma” impacting the corporate entity. Equally unfortunate that many companies appear to have resorted to play it safe than be sorry by “banning” romances or at least subjecting them to monitoring. Apart from policies mandating disclosure of personal relationships amounting to blatant violation of privacy, it also brings in the “chilling effect” at workplaces. Knowing the Laxman Rekha for sexual harassment is expedient to avoid such excessive or regressive actions. Sexual harassment in the eyes of law: The Act sets out an inclusive definition for sexual harassment but the Criminal provisions under S.354A Indian Penal Code is limited to specific actions. Of these, unwelcome physical contact and advances, explicit sexual overtures, demand or request for sexual favours and showing pornography against the will of a woman carry a more stringent punishment of three years, as opposed to making sexually coloured remarks, which is punishable with one year imprisonment. In addition, a person in a fiduciary relationship abusing his authority to induce or seduce a woman in his custody or charge or even present in the premises to have sexual intercourse, which may not amount to rape is also an offence punishable under S.376C IPC with six years imprisonment. Against this, the Sexual Harassment Act provides an open-ended inclusive definition. Implied or explicit promises of preferential treatment or threat of detrimental treatment including in present or future, in employment; interference with her work; creating an intimidating, offensive or hostile work environment; humiliating treatment likely to affect her health or safety are all acts amounting to sexual harassment under the Act. Corporate policies for internal penal actions may, therefore, be more stringent than those under IPC for initiation of criminal prosecution. These, however, would have to be explicitly set out in the human resources policies to support such initiation of action. Any corporate action against culprits would have to be preceded by an inquiry by ICC. Women — not just employees — protected: Corporate policies need to take into account that it is not just women employees but “any woman” present at a “workplace” who is protected under the Act. The Act is gender-specific to “women”, as victims but is gender neutral with respect to the perpetrator, i.e., complaint against a woman may be entertained for commission of sexual harassment against another woman, subject however to other provisions being applicable. Workplace & The Act: In today’s hyper-connected world every place in effect would become a workplace. The Sexual Harassment Act itself expands the workplace not just to the office premises but also to places visited by employees in the course of employment including transportation provided by the employer. It would therefore include even online workspaces. Purpose & its implementation: With the application of the Sexual Harassment Act extending to any woman present in a “workplace”, enforcing excessive or possibly restrictive protections to women employees is clearly misplaced. Similarly, placing employees in different hotels or mandating travel by co-workers on different vehicles reeks of segregation processes in schools and colleges. If not anything else it certainly demonstrates abject lack of trust. Most significantly, none of these actions, including restraining or restricting office romances or travels together or other regressive processes is likely to protect against commission of an act of sexual harassment. Short of restricting all forms of communication between the two genders, which clearly is not just impractical but impossible, there is no way for corporates to create Chinese walls to protect against complaints of sexual harassment – for a man may commit an offence against a woman employee (yes the law is gender specific) or against a non-employee. If the act is committed at a “workplace”, which could even be a coffee shop where a meeting is being held or even during a conference call, the ICC of the entity is required to entertain the complaint. It is imperative for corporates to understand that the law is not “against” them. Nor is it intended to become yet another restrictive and regressive step for women. It is intended as a facilitator for women to freely venture out and be part of the workforce. The law is for and about women. Experience has taught us that any attempt at keeping statistics “clean" will only defeat the purpose behind an enactment. Registration of a complaint with the ICC is not a blot on a corporate entity or a stigma. On the contrary, it reflects the robustness of its sexual harassment policies and implementation. It is not important to protect adults against each other especially against their natural urges or choices. The decisions of the Supreme Court from the Privacy judgment to the recent strike down of adultery as a Criminal offence demonstrate the need to protect an adult’s consensual choice. The need of the hour for companies is to, therefore, put in place effective processes for undertaking complaints of sexual harassment boldly and transparently and to ensure speedy and just disposals. The measure of a company’s worth or safe workplace may probably now depend not on a “clean slate” with no complaints registered but of effective, speedy and conscientious handling of sexual harassment complaints, which is a more plausible measure. (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

How #MeToo movement has impacted corporate world

What the government giveth, the government taketh. Beginning 1934, the Reserve Bank of India has enjoyed uninterrupted and unquestionable primacy in all things monetary in India.&nbsp;

The sudden volte-face by the government, has therefore shaken the RBI to its very foundations. When the inter-ministerial committee (IC) was constituted in October 2017, little did the RBI realise that it would result in ending its long era of dominance over regulating payment systems in India.

A quick flashback takes us to the RBI Act of 1934, which vested all matters monetary and regulatory with the central bank. This was consolidated with the Payment and Settlement Systems Act, 2007 (PSS Act) designating RBI, the banking regulator, as the over seer for all forms of payment systems.

The IC Report with its recommendation for a Payment Regulatory Board (PRB) with RBI being a minority stakeholder, has truly shaken and stirred the regulator, who till date exercised a monopoly over proceedings.&nbsp;

Even under the PSS Act of 2007, there was a central board comprised only of RBI representatives with its governor in the chair. The PRB, first mooted under the Finance Act 2017, paved the first step towards the dilution of RBI’s monopoly with its inclusion of equal representation of three central government representatives along with three RBI officials. The Finance Act, however, still vested the RBI governor with the position of ex-officio chairperson.

Then came the blow through the IC Report, which proposes for any “Person appointed by the government in consultation with the RBI”, to be appointed as the ex-officio chairperson.&nbsp;

Further, with the increase in the composition of the PRB to seven members with four (including the chairperson) being central government representatives, RBI clearly becomes a minority presence.

The central bank has not questioned government representation on the proposed PRB, but has voiced strong dissent against the dilution of its powers – especially of the chairperson no longer being only the RBI governor.&nbsp;

It has therefore insisted on this as also for veto powers to the chairperson, to ensure its majority. Its claim is based inter alia on its role as the banking regulator and hence the need for harmonious regulations.

The IC’s concessions to RBI’s dissent is to include the need for the chairperson to have “experience in the central banking function” and for RBI to have the power to “make a reference” to the PRB for consideration of issues pertaining to monetary policies. Neither of these meets the RBI’s pitch for retaining its power over regulating payment systems.

RBI faces a strong threat to unfettered primacy over regulating payment systems and its fear that this is only the beginning, may also not be misconceived. After all, RBI is no stranger to trespassing on alternate turfs, as was evident from its April 6, 2018, circular on financial data localisation by all payment systems, upstaging the then awaited government committee report.

The possibilities facing RBI now are (a) divestment of powers over payment systems, (b) dilution of its monopoly over regulating payment systems to merely a recommendatory role and (c) being reduced from a monopolistic regulatory position to that of an advisory one.&nbsp;

The implications for the nation are larger with the central government taking back the power to regulate payment systems instead of the settled construct of a unitary regulatory body exercising powers over all things monetary.&nbsp;

On one hand, this may reduce the now palpable friction between government policies or intent and regulatory execution (through RBI) and ensure harmony. On the other, monetary policies will seesaw with every change in the government. &nbsp;

Such state of flux may not augur well for certainty or stability in monetary policies. Internal turf wars then become a definitive possibility.

Legally speaking, RBI would be hard pressed to prove its claim to retain its monopolistic regulatory right. The sovereign right over deciding India’s monetary policy vests with the central government.

RBI’s right to regulate payment systems is through statutory authority vested under the PSS Act of 2007. This, of course, can or may be modified through parliamentary process, which is what the proposed amendments to the PSS Act envisages.&nbsp;

Prolonged vesting of authority in RBI by itself is therefore not going to be sufficient for the central bank to sustain its claim. The separation of powers argued by the RBI in its dissent note is one of vested authority and not a constitutional one.&nbsp;

The RBI dissent is that of a singular minority in the report of the IC and the majority view may therefore prevail. In any event, the report itself is merely a recommendation. It is for the houses of Parliament (or the Finance Act route) to decide the future of regulation of payment systems.&nbsp;

Payment systems now permeate chat apps and online games. In just a decade, private, especially international players, have slowly become the primary or preferred payment mechanisms, as opposed to banks. Despite tightening of regulation, private players have consistently found loopholes.

The recent thrust has been towards digital payment alternatives, especially after demonetisation.&nbsp;

In a world ill-equipped to deal with evolving technologies – abject digital illiteracy, poor enforcement mechanisms against evolving cyber-crimes, financial frauds, Ponzi schemes and technology-enabled crimes, the urgent need is for a strong regulator with sufficient powers to not only prevent, but to also protect and punish.&nbsp;

 
(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-rocking-the-central-bank-2680325">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

&nbsp;

What the government giveth, the government taketh. Beginning 1934, the Reserve Bank of India has enjoyed uninterrupted and unquestionable primacy in all things monetary in India.

What the government giveth, the government taketh. Beginning 1934, the Reserve Bank of India has enjoyed uninterrupted and unquestionable primacy in all things monetary in India. The sudden volte-face by the government, has therefore shaken the RBI to its very foundations. When the inter-ministerial committee (IC) was constituted in October 2017, little did the RBI realise that it would result in ending its long era of dominance over regulating payment systems in India. A quick flashback takes us to the RBI Act of 1934, which vested all matters monetary and regulatory with the central bank. This was consolidated with the Payment and Settlement Systems Act, 2007 (PSS Act) designating RBI, the banking regulator, as the over seer for all forms of payment systems. The IC Report with its recommendation for a Payment Regulatory Board (PRB) with RBI being a minority stakeholder, has truly shaken and stirred the regulator, who till date exercised a monopoly over proceedings. Even under the PSS Act of 2007, there was a central board comprised only of RBI representatives with its governor in the chair. The PRB, first mooted under the Finance Act 2017, paved the first step towards the dilution of RBI’s monopoly with its inclusion of equal representation of three central government representatives along with three RBI officials. The Finance Act, however, still vested the RBI governor with the position of ex-officio chairperson. Then came the blow through the IC Report, which proposes for any “Person appointed by the government in consultation with the RBI”, to be appointed as the ex-officio chairperson. Further, with the increase in the composition of the PRB to seven members with four (including the chairperson) being central government representatives, RBI clearly becomes a minority presence. The central bank has not questioned government representation on the proposed PRB, but has voiced strong dissent against the dilution of its powers – especially of the chairperson no longer being only the RBI governor. It has therefore insisted on this as also for veto powers to the chairperson, to ensure its majority. Its claim is based inter alia on its role as the banking regulator and hence the need for harmonious regulations. The IC’s concessions to RBI’s dissent is to include the need for the chairperson to have “experience in the central banking function” and for RBI to have the power to “make a reference” to the PRB for consideration of issues pertaining to monetary policies. Neither of these meets the RBI’s pitch for retaining its power over regulating payment systems. RBI faces a strong threat to unfettered primacy over regulating payment systems and its fear that this is only the beginning, may also not be misconceived. After all, RBI is no stranger to trespassing on alternate turfs, as was evident from its April 6, 2018, circular on financial data localisation by all payment systems, upstaging the then awaited government committee report. The possibilities facing RBI now are (a) divestment of powers over payment systems, (b) dilution of its monopoly over regulating payment systems to merely a recommendatory role and (c) being reduced from a monopolistic regulatory position to that of an advisory one. The implications for the nation are larger with the central government taking back the power to regulate payment systems instead of the settled construct of a unitary regulatory body exercising powers over all things monetary. On one hand, this may reduce the now palpable friction between government policies or intent and regulatory execution (through RBI) and ensure harmony. On the other, monetary policies will seesaw with every change in the government. Such state of flux may not augur well for certainty or stability in monetary policies. Internal turf wars then become a definitive possibility. Legally speaking, RBI would be hard pressed to prove its claim to retain its monopolistic regulatory right. The sovereign right over deciding India’s monetary policy vests with the central government. RBI’s right to regulate payment systems is through statutory authority vested under the PSS Act of 2007. This, of course, can or may be modified through parliamentary process, which is what the proposed amendments to the PSS Act envisages. Prolonged vesting of authority in RBI by itself is therefore not going to be sufficient for the central bank to sustain its claim. The separation of powers argued by the RBI in its dissent note is one of vested authority and not a constitutional one. The RBI dissent is that of a singular minority in the report of the IC and the majority view may therefore prevail. In any event, the report itself is merely a recommendation. It is for the houses of Parliament (or the Finance Act route) to decide the future of regulation of payment systems. Payment systems now permeate chat apps and online games. In just a decade, private, especially international players, have slowly become the primary or preferred payment mechanisms, as opposed to banks. Despite tightening of regulation, private players have consistently found loopholes. The recent thrust has been towards digital payment alternatives, especially after demonetisation. In a world ill-equipped to deal with evolving technologies – abject digital illiteracy, poor enforcement mechanisms against evolving cyber-crimes, financial frauds, Ponzi schemes and technology-enabled crimes, the urgent need is for a strong regulator with sufficient powers to not only prevent, but to also protect and punish. (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Rocking the central bank

With the RBI data localisation mandate becoming effective as of October 15, the debate on its legality and viability is revived. Reports indicate that whilst most entities subject to regulation by RBI have complied, the larger multinationals, who probably account for the larger quantum of transactions, are still resisting compliance.

RBI’s circular of April 2018 pertains only to banks and payment systems that it regulates. Its mandate for data localisation also was restricted to all aspects of payments data. The multitude of commercial establishments, which have and utilise financial data, will be covered only under the provisions of the proposed Personal Data Protection (PDP) Bill, 2018. The deadline for public comments is now closed and the presentation of the final draft Bill is expected soon.

Presently, the draft PDP Bill also clearly provides for localisation of critical personal (CP) data but leaves definition thereof to the Central government. Global trends that are elicited and the recommendations accompanying the draft PDP Bill clearly indicate that a wide spectrum of CP, including data of critical infrastructure, finance and health would probably form part of CP.

RBI may have jumped the gun with its circular pre-dating the draft PDP Bill and Report, but it is not off the mark in its call for localisation. Many of us were sceptical about the call for localisation keeping in mind business needs and practicalities, but there cannot be any quandary about protecting critical data from rampant dissemination.

The objections to data localisation range from economic to absurd – additional costs and teething problems that any change in processes entail, do not appear to be the real reasons for the objections though they are projected, as such. The other objections touted at most discussions across India are (a) possibility of surveillance by Indian law enforcement agencies, (b) breaches and vulnerabilities of systems and (c) purported availability of better infrastructure outside India. The other and more recent objections including from USA is for “free flow of data” to enable businesses and to “benefit users”.

Each of the above objections to data-sharing appears specious. Surveillance was and continues to be a matter of grave concern, but to claim that it is a malaise restricted to India is untenable. Indians would, in fact, benefit from localisation to the extent that there would be immediate access to remedies against violation of due process. This would not be the case if their rights are violated outside India.

System vulnerability too is not confined to India. As with the vulnerability of systems in USA or Europe, so would it be in India. Similarly, the need to create local infrastructure and systems only spells business opportunities for India. The cost is an on-time investment and the returns and benefits are likely to be sustained over long periods of time.

Finally, free flow of data is and continues to be the bedrock of the Internet, but the very jurisdiction seeking this is the one which moved away from a Net Neutrality regime. That does not justify India opting for protectionist or exclusionary processes. Again, this would be so only if the data localization sought is intended or will result in the same.

Data localisation mandated under the RBI circular and that which is envisaged under the draft PDP Bill are not completely protectionist. It is limited to financial data under the RBI circular and CP under the draft PDP Bill.

Scratch the surface and the real reason for opposition comes to the fore. The need for one of the largest caches of data, as India is, stems not just from commercial interests or profits, but from the larger issue of “Control”. USA’s attempt to flex its muscles to coerce RBI to reverse its position or to extend an extremely elongated compliance window indicates its intent.

Data sharing and control over data has become the new battleground for control. Many an instance of not just data collation or analysis, but of manipulation using data analytics demonstrates the power of data. USA’s ‘‘Clarifying Lawful Overseas Use of Data Act’’ or the ‘‘CLOUD Act’’ and its overreaching provisions for interception and procuring of data of any online user is another illustration of the vulnerabilities that Indians’ data may be subjected to with unfettered data transfers.

The Justice Srikrishna Committee Report indicates that the decision to allow free flow of data and to limit restrictions only to CP indicates a well thought out process.

Apart from the loss of control, the next large concern appears to be jurisdiction. There has been consistent resistance from multinationals to subject themselves to India’s jurisdiction. Instances abound of government authorities’ orders and in many instances, even court orders not being complied with on grounds of jurisdiction. Localization would necessarily ensure not just ease of obtaining data for investigative, tax and other government purposes, but also for victims and litigants to enforce their rights more expeditiously.

The final fear-factor appears to be the nemesis of “taxation”. The Income Tax Act, 1961 already defines the principal place of business-wide enough to encompass the place where a business, profession or vocation is situated. Localization by itself would mean implementation of local infrastructure, which may give the taxman his much-needed jurisdiction.

Data localisation is here to stay. RBI’s circular and its implementation by a substantial number of entities governed by it has already proven feasibility. National interests, the exercise of sovereignty, need for easy access to data and possibly preventing foreign surveillance and dissemination are all bound to prevail over external pressure, for the Indian government to pass the provisions for data localisation. 
&nbsp;

(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-us-flexes-cyber-muscles-2676092">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

&nbsp;

With the RBI data localisation mandate becoming effective as of October 15, the debate on its legality and viability is revived. Reports indicate that whilst most entities subject to regulation by RBI have complied, the larger multinationals, who probably account for the larger quantum of transactions, are still resisting compliance.

With the RBI data localisation mandate becoming effective as of October 15, the debate on its legality and viability is revived. Reports indicate that whilst most entities subject to regulation by RBI have complied, the larger multinationals, who probably account for the larger quantum of transactions, are still resisting compliance. RBI’s circular of April 2018 pertains only to banks and payment systems that it regulates. Its mandate for data localisation also was restricted to all aspects of payments data. The multitude of commercial establishments, which have and utilise financial data, will be covered only under the provisions of the proposed Personal Data Protection (PDP) Bill, 2018. The deadline for public comments is now closed and the presentation of the final draft Bill is expected soon. Presently, the draft PDP Bill also clearly provides for localisation of critical personal (CP) data but leaves definition thereof to the Central government. Global trends that are elicited and the recommendations accompanying the draft PDP Bill clearly indicate that a wide spectrum of CP, including data of critical infrastructure, finance and health would probably form part of CP. RBI may have jumped the gun with its circular pre-dating the draft PDP Bill and Report, but it is not off the mark in its call for localisation. Many of us were sceptical about the call for localisation keeping in mind business needs and practicalities, but there cannot be any quandary about protecting critical data from rampant dissemination. The objections to data localisation range from economic to absurd – additional costs and teething problems that any change in processes entail, do not appear to be the real reasons for the objections though they are projected, as such. The other objections touted at most discussions across India are (a) possibility of surveillance by Indian law enforcement agencies, (b) breaches and vulnerabilities of systems and (c) purported availability of better infrastructure outside India. The other and more recent objections including from USA is for “free flow of data” to enable businesses and to “benefit users”. Each of the above objections to data-sharing appears specious. Surveillance was and continues to be a matter of grave concern, but to claim that it is a malaise restricted to India is untenable. Indians would, in fact, benefit from localisation to the extent that there would be immediate access to remedies against violation of due process. This would not be the case if their rights are violated outside India. System vulnerability too is not confined to India. As with the vulnerability of systems in USA or Europe, so would it be in India. Similarly, the need to create local infrastructure and systems only spells business opportunities for India. The cost is an on-time investment and the returns and benefits are likely to be sustained over long periods of time. Finally, free flow of data is and continues to be the bedrock of the Internet, but the very jurisdiction seeking this is the one which moved away from a Net Neutrality regime. That does not justify India opting for protectionist or exclusionary processes. Again, this would be so only if the data localization sought is intended or will result in the same. Data localisation mandated under the RBI circular and that which is envisaged under the draft PDP Bill are not completely protectionist. It is limited to financial data under the RBI circular and CP under the draft PDP Bill. Scratch the surface and the real reason for opposition comes to the fore. The need for one of the largest caches of data, as India is, stems not just from commercial interests or profits, but from the larger issue of “Control”. USA’s attempt to flex its muscles to coerce RBI to reverse its position or to extend an extremely elongated compliance window indicates its intent. Data sharing and control over data has become the new battleground for control. Many an instance of not just data collation or analysis, but of manipulation using data analytics demonstrates the power of data. USA’s ‘‘Clarifying Lawful Overseas Use of Data Act’’ or the ‘‘CLOUD Act’’ and its overreaching provisions for interception and procuring of data of any online user is another illustration of the vulnerabilities that Indians’ data may be subjected to with unfettered data transfers. The Justice Srikrishna Committee Report indicates that the decision to allow free flow of data and to limit restrictions only to CP indicates a well thought out process. Apart from the loss of control, the next large concern appears to be jurisdiction. There has been consistent resistance from multinationals to subject themselves to India’s jurisdiction. Instances abound of government authorities’ orders and in many instances, even court orders not being complied with on grounds of jurisdiction. Localization would necessarily ensure not just ease of obtaining data for investigative, tax and other government purposes, but also for victims and litigants to enforce their rights more expeditiously. The final fear-factor appears to be the nemesis of “taxation”. The Income Tax Act, 1961 already defines the principal place of business-wide enough to encompass the place where a business, profession or vocation is situated. Localization by itself would mean implementation of local infrastructure, which may give the taxman his much-needed jurisdiction. Data localisation is here to stay. RBI’s circular and its implementation by a substantial number of entities governed by it has already proven feasibility. National interests, the exercise of sovereignty, need for easy access to data and possibly preventing foreign surveillance and dissemination are all bound to prevail over external pressure, for the Indian government to pass the provisions for data localisation. (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

RBI data localisation: US flexes cyber muscles

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