‘Datafication’ is at the core of the global digital economy. With enormous amounts of data at their disposal, businesses are now equipped to capture value from analytics. Personal data is being collected and analysed to better understand preferences of customers and their willingness to pay. The importance of data has also risen in the ranks as an input to global trade and commerce, affecting not only the information technology sector, but also traditional industries. However, the dynamism of the data economy is not without challenges. Burgeoning volumes of data, its evolving nature and utility have brought fresh policy challenges to the fore. The vacuum of an implementable international framework, coupled with the nature of the Internet and data to disregard geographical and sovereign boundaries, and stringent measures regulating the flow of data have taken the form of localisation across several countries. This report borrows from recent literature on data localisation to provide a granular view on the economic implications of existing and proposed localisation measures adopted by India. The study follows a three-pronged approach: (i) an econometric estimation measuring the impact of cross border data flows on India’s total trade, (ii) in-depth case studies with domestic and global companies to determine implications of localisation, and (iii) an enterprise survey to see the broader impact of localisation on businesses operating in and engaging with India. Annual Report 2018-19 50 The study finds that cross border data flows have a significant impact on international trade. The case studies reveal the mixed effects of localisation. Established multi-national companies with global delivery models are likely to be most affected by localisation. The study is not a blanket assessment on the need for data localisation. However, it does bring evidence on the economic implications of such policies in India.
