Govt asks Amazon India to set up server to protect customers' personal data

The government has asked American e-commerce major Amazon to set up a server in India as it looks to prevent unbridled migration of the personal data of customers. Recently, Electronics and Information Technology Minister Ravi Shankar Prasad conveyed this to Amazon India head Amit Agarwal. In the past too, the government has been vocal about data localisation, engaging with companies such as Google, WhatsApp and Facebook on the issue.

Although currently there is no law in India regarding data safety, the government is working on a data protection framework based on the recommendations of Justice B N Srikrishna-led panel. To start with, foreign e-commerce companies will be asked to set up servers in India, so that the personal data of customers, generated through e-commerce operations, does not go out of the country. The draft national policy for e-commerce also proposes mandatory localisation of customer data. However, once the data protection rules come into effect, all the sectors will fall under their purview.

“Big foreign companies are welcome to join their effort in India. What concerns me is unbridled migration of data, without the consent of Indians. Therefore, location of servers in India and the element of consent of Indians for use of their data become equally important,” Prasad said.

The minister had told Agarwal during their meeting that they were welcome to do business in India, but generation of the data through e-commerce operations should not be sent out of India. “We are concerned about the safety, security and the element of consent of Indians…therefore you (Amazon) must have your server here and this initiative must be taken on priority,” Prasad said.

A query sent to Amazon remained unanswered at the time of going to press. However, officials in the government indicated that Amazon was working to protect the data of Indians. Prasad also conveyed to Amazon that India has traditionally been empowered by small grocery shop owners in retail marketing and e-commerce giant companies must work in a manner that their interests are protected.

The Indian e-commerce market is currently dominated by Amazon and Flipkart. With Walmart acquiring 77 per cent stake in Flipkart, both the companies are technically owned by US-based firms.

As other players in the e-commerce sector like Paytm, Snapdeal etc have foreign holding, the Centre wants to ensure that data of customers should be protected. An official in the IT Ministry asked why the US should know about the eating preferences or jewellery choices of Indians shopping online.

The government though is not likely to be very stringent in movement of data, which is not sensitive. “Any constructive use of data is welcome. I am very keen that India becomes a centre of data analysis. The huge data generated by Indians in India itself creates a big market for that,” Prasad said.

Most of these concerns will be addressed in the data protection law, he added. The Justice B N Srikrishna-led panel had submitted the recommendations and draft data protection bill to the government last month. The panel had proposed explicit consent must be taken for processing sensitive personal data like biometrics, sexual orientation, and religious or political belief. Also, at least a copy of such personal data should be stored in India. The bill is open for public comments after which the Cabinet will decide on the modalities.