Economic Implications of Cross-Border Data Flows

November 1, 2019

While the rapid increase in data flows has contributed to growth and socio-economic transformations, it has also amplified policy questions related to anti-trust conduct, inequality, privacy, data security and surveillance. Some of these questions are driven by the capacity, integrity and commitment of private businesses to secure users’ personal data they collect and utilize for business purposes. Additionally, policy making by some governments has sparked debate on issues of data sovereignty and citizens’ privacy. Given that international legal and regulatory regimes develop at a much slower pace than technology, some countries have adopted regional rules and guidelines or their own national policies on data regulation.Governments are raising concerns about the safety of data routed through and stored outside their jurisdictions. Data localisation policies require data pertaining to citizens of a country to be processed and/ or stored within its jurisdiction; moreover, inflexible mandates can completely restrict the flow of data outside the country.

This report builds on the recent literature on data localisation to provide a reflective view on the economic implications of the existing and proposed localisation measures in India. The study captures the economic impacts of data localisation by presenting both domestic and global business models and the potential impact on India’s international trade. Localisation measures more often than not transcend economic considerations. A blanket assessment on the need for or ecacy of data localisation, is therefore not within the scope of this study. The focus of this study is restricted to the economic dimension.