India's government released over the weekend a new draft national e-commerce policy that clearly shows the Narendra Modi administration sees data as a new national resource, and it has every intention of harnessing it. Here are some excerpts from the policy that highlight the government's approach:
- The data of a country is best thought of as a collective resource, a national asset, that the government holds in trust, but rights to which can be permitted. The analogy of a mine of natural resource or spectrum works here.
- India and its citizens have a sovereign right to their data. This right cannot be extended to non-Indians (the same way that non-Indians do not have any prima facie right or claim to, say, an Indian coal mine).
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Location of the computing facilities like data centers and server farms within the country will not only give a fillip to computing in India but will also lead to local job creation....In the future, economic activity is likely to follow data. It is hence vital that we retain control of data to ensure job creation within India.
Parminder Jeet Singh, executive director of Bengaluru-based nonprofit IT For Change, compares the race for rights over data to the industrialization of an earlier era.
"India is in a formative period of a new kind of economic policy, social order," said Singh. "India lost out on industrialization, but today we sit at an important historical point of digital industrialization. We need to take some strong measures, and this is only the first stake in the ground."
Singh was part of a working group assembled by the government to help draft this policy. The group was predominantly made up of companies started in India, although not necessarily incorporated here, including the now Walmart-owned Flipkart, Mukesh Ambani's Jio, MakeMyTrip, Ola, Paytm, among others, reported MediaNama. The working group excluded companies based overseas, such as Amazon, Uber, Visa and MasterCard.
"The question," says Singh, "is who owns the economic value of the data?"
This is a question being raised in other markets as well as control of data by internet giants becomes an area of increasing focus. Last year, the European Union's antitrust regulators opened a preliminary investigation to check whether Amazon unfairly copies popular products sold by rivals on its website.
"The policy is putting its priorities on data right," says cyber lawyer Pavan Duggal. "Indian data has been trickling out of India, and India hadn’t woken up to the power of data and this document recognizes that."
The policy lists examples of how companies collect user data and then use that information to tailor their marketing activities to focus on particular individuals with specific products.
"Companies with maximum access to data about consumers stand to make windfall profits from leveraging this through targeted advertising and product development," the draft says. "Going further, data generated by activity in one area can provide a competitive edge for a new business in another area. Further, algorithms can mine a vast amount of unstructured data generated from diverse sources, including the Internet of Things (IoT), for identifying trends and patterns which have considerable commercial value."
The draft lays out the bottomline: "Access to data has emerged as a main determinant of success of an enterprise in the digital economy."
But not everyone is pleased with the draft policy. Vivan Sharan, partner at Koan Advisory, a consultancy that works with several foreign technology companies that are operating in India, says the policy does "a poor job" at understanding what drives innovation and value in the digital world.
"Innovation stems from the provision of incentives, the basic premise of the many intellectual property frameworks," he says. "If the state takes away such incentives by labeling itself the self-declared ‘trustee’ of all data generated domestically, which seems to be a central premise of the draft policy, it does no service to the growth of a digital India."
Consider for instance, he adds, if Indian startups are forced to share proprietary data sets and source-codes with larger domestic competitors under the guise of unfettered access, "what would be the incentive of a small business to get involved in a data-driven business in the first place...? What are the safeguards in place for any business to survive such future state-interventions?"
The draft is open for comments from the public till early March.
