India in talks for data embassies, UAE first in queue

India may create special zones in the country to house these data embassies. (Pixabay)
India may create special zones in the country to house these data embassies. (Pixabay)

Summary

  • The move follows an Estonia-Luxembourg agreement of 2015 which saw Estonia store a digitized copy of its citizens' data in Luxembourg.

New Delhi is in talks with several countries to house so-called data embassies, which will allow them to store a copy of sovereign data here and retain control over it, three people aware of the matter said. According to two of them, talks to set up the UAE's first data embassy in India are at an advanced stage.

India may create special zones in the country to house these data embassies, the people said on the condition of anonymity. The move comes at a time the country is strengthening its data privacy laws.

“The idea of a data embassy isn’t new, and could require a new policy framework to operate. But, with the onset of the project, India is looking to create special strategic zones where data centres dedicated to sovereign data storage of multiple nations will be located. While India may engage in the safekeeping of the data, everything including privacy, handling and access will be handled by the embassy itself," one of the three people cited above said. These facilities will work just like the way consular divisions of embassies typically function.

Also read | 2025 to be India’s year in semiconductors and data protection: Minister Ashwini Vaishnaw

Andhra Pradesh, home to the Adani Group’s data centre plans as well as data centre infrastructure backed by the Ministry of Electronics and Information Technology (Meity), is expected to host the first data embassy, the people said.

A second person said talks are progressing at a steady pace.

“Setting up data infrastructure for the world to keep a copy of its data will lend India considerable geopolitical credibility as a stable region—at a time when multiple nations are navigating social and financial instabilities. Data embassies, over the next five years, will emerge as a crucial property for India to sustain, and laws and policies will ensure that they accommodate the same," this person said.

Queries emailed to the embassy of the UAE as well as Meity remained unanswered.

Estonia was the first country to store a digitized copy of its citizens' data in Luxembourg, after a cyberattack disrupted the tiny nation in 2007. Currently, the country stores data at its Luxembourg data embassy. India is seeking to follow the same model. An agreement between India and the UAE will be the first between large economies.

Also read | Mint Primer: Can India turn into a global hub for data centres?

The purpose

“Such embassies would serve multiple purposes. For one, this can let contingencies and backups be created in a different geography, in case of a natural calamity or geopolitical unrest. The smooth flow of data today is crucial for most nations. Nations could also use their data embassies as a hub for companies of their nationality’s origin to localize some data in a foreign land, without being forced to comply with the said land’s data regulations," the third person said.

Industry stakeholders said that the move is a natural step forward for India to emerge as a key data location, but acknowledged many challenges persist.

Dhruv Garg, partner at law and policy firm Indian Governance and Policy Project (IGAP), said that policy intricacies could be a key hurdle. “The previous minister of state (MoS) for IT Rajeev Chandrasekhar had underlined that data embassies would be part of India’s data laws. While we are yet to see that play out, it’s important to note that the role and specifications of a data embassy would depend more on the bilateral agreement that two nations sign. Straight up, the role of data embassies would primarily be defined under the same norms that defined the two-way exchange of facilities as defined by the Vienna Convention on Consular Relations, 1963," he said.

Also read | Mint Explainer: India’s data privacy law, its rules, and roadblocks

Garg added that one key policy hurdle could emerge if data embassies allow companies of their own nationality’s origin to use their facilities—thereby effectively circumventing the laws of a foreign land. “This is an area where work continues to be done, and finer details would need to be defined under law before data embassies become operational," he said.

Jayanth Kolla, partner at technology consultancy firm Convergence Catalyst, added that operational aspects going beyond policy roadblocks would be even more critical in India’s efforts to draw data embassies to its shores. “Much will depend on how data centres in India are operated, and the way embassies are afforded their status as that. If operations end up being outsourced and operated by Indian entities, there could be the need for far stricter cyber security penalties and a specialized form of law to make way for such embassies to operate here," Kolla said.

For now, though, only select nations are in talks with each other for such embassy-like setups. “Digitization levels in emerging economies lie far, far behind the those in bigger ones. If data embassies work in a two-way format that consular embassies typically have, most nations may not be ready to operationalize such facilities yet," Kolla said.

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