Consumer Impact Assessment on Cross-Border Data Flow

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The digital technology revolution has bolstered globalisation , turning the world into a global village. Not only has it enhanced People to People (P2P) connectivity, but has also catalysed Business to Business (B2B) interaction. Reports suggest that cross-border data flow contributed USD 2.8 trillion to the global economy in 2014, which is expected to touch USD 11 trillion by 2025. However, governments of many countries have been prompted to restrict cross-border data flow and mandate ‘data localisation’. Some of such countries include China, Russia, Vietnam, Indonesia etc., which have drafted provisions requiring localisation of certain data. Select provisions of different countries which have mandated Data Localisation (DL) in certain instances has been compiled by various previous studies. India has also begun walking on the same path.

There are several arguments put forth by various stakeholder groups both in favour and against such a move. The Srikrishna Committee (the committee) report (the report) recognises, ‘India would have to carefully balance possible enforcement benefits of localisation with the costs involved in mandating such a policy in law’ . There is therefore a need to explore alternative regulatory frameworks pertaining to data localisation mandates which can achieve desired objectives in a manner that their net benefits are substantially positive and exceed perceived net benefits of data localisation.

The committee also noted that no evidence of a Cost-Benefit Analysis (CBA) was presented before it to determine if the costs of local data processing outweigh benefits to companies having access to burgeoning consumer database. Any regulation on cross-border data flow needs to consider interests of different stakeholder groups. These include, inter alia, consumers, government and industry players (data center operators, data processors, data users, start-ups and small and medium enterprises).

Various studies have estimated the potential impact of DL on various stakeholders. However, none of these studies have captured, or presented the impact on consumers, emanating from DL. This gap needs to be filled. A bottom-up approach needs to be adopted for taking a consumer perspective.

Understanding consumer impacts is critical to the success of public policies. Consumers not only benefit from competition, but also drive it, directly impacting on the competitiveness of firms and the productivity of a nation.

Consumer Impact Assessment (CIA) has been a recognised as an important scientific tool by many countries. It is instrumental in measuring and ensuring the success of proposed regulations. Being a consumer facing organisation (and considering the previously conducted above mentioned studies), Consumer Unity and Trust Society (CUTS) is undertaking an evidence-based CIA, i.e. a CBA, the primary objective of which is to ‘map the interests of consumers with respect to personal data localisation, and suggest the most optimal regulatory framework required to be put in place to ensure consumer welfare’.

 

 

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