Introduction – GDPR on Indian Corporates
The enforcement of the European Union’s General Data Protection Regulation (GDPR) in 2018 has transformed global data privacy standards. As it stands, its impact ripples through borders forcing companies to reevaluate how they handle data. This transformative regulation is not lost on Indian corporates, irrespective of being local or global.
Foreign Companies and Indian Corporates
Business organizations of all sizes and industries have to consider all applicable regulations as well as compliance requirements to ensure domestic and international operations adhere to the rules. Around 70% of all Indian companies with European clients are said to have faced problems with achieving compliance with GDPR. For many, making sense of the intricacies of this legislation is no longer optional it’s a business imperative. For example, if you’re providing IT solutions for European markets, operating cross-border e-commerce, offering services to EU entities, or similar situations, then GDPR compliance is a must if you want to avoid high penalties and maintain customer trust.
So let’s take a deep dive into the impact of GDPR on Indian corporates, the challenges they face, and the opportunities it creates.
Understanding GDPR and Its Global Reach
Overview of GDPR and Its Key Principles
The General Data Protection Regulation (GDPR) is an exhaustive data privacy regulation that was enacted to protect the personal data of all the residents of the EU. Key principles include:
- Transparency: Informing people about data collection and use.
- Purpose limitation: Process data only for specified, legitimate purposes.
- Data Minimization: Only collecting the data required to achieve the desired outcome.
- Accuracy: Keeping personal data accurate and up to date.
- Storage Limitation: Keeping data only for the duration needed.
- Security: Implementing safeguards against data breaches.
Territorial Application and Why Indian Entities Find the Need to Comply
Unlike previous EU regulations, the GDPR’s extraterritorial effect extends to companies outside the EU if:
- They provide goods or services to people in the EU.
- They track EU residents’ behavior, including their internet activity.
Non-European Companies Domestically Subject to GDPR
For Indian companies dealing in EU data, compliance with the GDPR is not optional. IT firms, outsourcing businesses, and e-commerce platforms are especially impacted because they tend to analyze large amounts of personal data belonging to residents in the EU
What is GDPR Compliance in India?
GDPR compliance means acting by the requirements of the regulation like providing valid consent, securing the data, and respecting the rights of data subjects. Indian corporates should be mindful to change their policies and practices to ensure compliance, especially in the case of transferring EU data.
Essential Steps that Indian Businesses Should Consider for GDPR Compliance
- Aggregate all the personal data collected and processed through a data audit.
- Designate a Data Protection Officer (DPO), if needed.
- Ensure data subjects have transparent and accessible privacy policies.
Why GDPR Compliance is Relevant for Cross-Border Operations
GDPR compliance is a key part of cross-border transactions for Indian businesses that want to maintain their footing or expand in EU markets by enhancing their credibility and trust.
To delve deeper into the mutual analysis of Data Privacy Risks and how Indian businesses can assess and mitigate them, please refer, Data Protection Impact Assessment: A Need for Modern-Day Businesses in India.
Whether Indian companies are covered under GDPR?
When Indian Companies Are Covered By GDPR
The Indian companies would fall under the jurisdiction of GDPR when:
- They also process EU residents’ data.
- Their services cater to EU customers, such as providing websites localized to that continent or using currencies of EU countries.
Situations With EU Resident Data Processing
Examples include:
- An EU client database is being managed by an Indian IT firm.
- An Indian e-commerce site selling goods to EU clientele.
Case Studies of Indian Firms Affected by GDPR
- IT Services: An EU firm engaging with a Bengaluru-based IT company for cloud solutions had to appoint a DPO and change its privacy policy.
- E-Commerce: A European Union (EU) customer e-retailer operating out of India updated its cookie policies to comply with GDPR.
Who Does GDPR Apply To?
Entities Subject to GDPR Including Companies and Organizations
GDPR applies to:
- Data Controllers: Individuals or legal persons who define the aims and methods of processing data.
- Data Processors: Those who process data on behalf of data controllers.
GDPR Applicability (Data Controllers and Processors) Migration.
An Indian organization is considered a controller and processor if it:
- Gather data directly from residents in the EU.
- Handle data for European Union businesses.
Relevance to Indian Companies Selling Goods or Services to Customers in the EU
Businesses need to comply if they:
- Tailor your online presence to EU markets.
- Use behavioral analytics to track EU citizens.
Why Data Protection Matters to Indian Corporates
Relevance to Indian Organizations Dealing with EU Companies
Readiness for GDPR is critical for:
- Establishing trust in European clients.
- Preventing interruptions to their operations.
Costs of Non-Compliance: Fines and Reputational Damage
The fine can reach up to €20 million or 4% of global annual turnover whichever is greater. Even more expensive is the reputational damage that accompanies data breaches.
How GDPR has influenced Indian Data Privacy laws like the DPDP Act
The DPDP Act: India’s Digital Personal Data Protection, 2023 (DPDP) Act borrows elements from the GDPR, indicating a move toward tighter domestic data protection legislation.
What is the GDPR Policy for Companies?
Key Elements of GDPR Policies for Enterprises
- Privacy Notices: Transparency about how and what data is being collected.
- Data Subject Rights: Provide users with the ability to view, edit, or remove their data.
- Consent Mechanisms: Ensure a transparent opt-in process.
GDPR Policies to Draft: Privacy Notices, Consent Mechanisms, and Data Subject Rights
Policies should outline:
- Why do we collect data?
- Retention periods.
- Information on how to contact the company with queries or complaints about data.
How Indian Corporate Can Implement GDPR-Compliant Policies
India companies can partner with legal professionals to:
- Draft comprehensive policies.
- Incorporate best practices that GDPR mandates.
Key Compliance Challenges for Indian Businesses
Data Processing Agreement with EU entities
Businesses in India need to set up Data Processing Agreements (DPAs) with other businesses which includes the responsibilities that they owe to each other under GDPR.
Providing Its Audience with Consent and Data Transparency
Challenges include:
- Designing clear consent forms.
- Making sure data subjects know how their data is used.
Challenges – Appointing EU-Based Representatives or Data Protection Officers (DPOs)
- Find actively engaging EU representatives.
- Make DPO maintenance economically justifiable.
Compliance Cost: Upgrades In Technology And Consultancy
Implementing compliance requires a substantial investment in:
- Cybersecurity infrastructure.
- Legal advisory services.
Opportunities from GDPR Compliance
Building Trust and Credibility with Global Clients
GDPR compliance helps Indian organizations become trusted partners for businesses across geographical locations.
A Competitive Edge for GDPR-Compliant Indian Businesses
Firms adhering to GDPR can:
- Penetrate the EU market against non-compliant competitors.
- Establish long-term, trust-based relationships.
Using GDPR Compliance as a Gateway to Global Expansion
GDPR compliance enables:
- Expansion into additional regulated markets.
- Cross-border collaborations.
GDPR Compliance: A step-by-step guide for Indian Corporates
A GDPR Readiness Assessment
Steps include:
- Mapping data flows.
- Recognizing limitations in prevailing practices.
- Data Protection Impact Assessment (DPIA) is a critical part of this process.
Data Protection Policies and Training Programs
Train employees on:
- Recognizing phishing attacks.
- Responding to data breaches.
Where to Begin: Privacy-by-Design Frameworks for Product Development
Embed privacy measures into:
- Application design.
- Operational workflows.
Steps for Effectively Managing a Data Breach
- Have an incident response plan in place.
- Alert authorities within 72 hours of discovering a breach.
Case Studies: How Indian Corporates Are Dealing With GDPR
Example 1: An IT Company Journeying to GDPR Compliance
- Performed a thorough data audit.
- Configured encrypted data disks.
Example 2: Issues for an Indian E-Commerce Company with European Clients
- Had difficulty developing cookie policies compliant but resolved them through legal advice.
A Few Lessons Learned and Best Practices
- Take compliance efforts seriously as early as possible.
- Invest in ongoing training.
FAQ: Common Questions About GDPR and Indian Corporates
Q1. What is GDPR Compliance in India?
It refers to the need to comply with the provisions of GDPR, including but not limited to, consent, security of the data collected, and rights of data subjects. It applies to Indian companies processing the personal data of EU residents.
Q2. Is GDPR Applicable to All Indian Companies?
No, the GDPR is only applicable to Indian companies that process personal data of EU residents, or market to EU markets. Businesses providing goods, and services or monitoring the behavior of EU residents are subject to compliance.
Q3. What If an Indian Company Violates GDPR?
To get started, companies need to perform data audits, appoint a data protection officer (DPO), set up data protection policies, and offer employee training.
Q4. How Can Indian Companies Start the GDPR Compliance Process?
To get started, companies need to perform data audits, appoint a data protection officer (DPO) set up data protection policies, and offer employee training.
Q5. What Are the Benefits of GDPR Compliance for Indian Corporates?
This paves the way for benefits like increased trust and credibility among international clients, lower failure risk rates (FRR), competitive advantage in global markets, and readiness for stricter data privacy laws across the globe.
GDPR and Indian Businesses in the Future
Expected Changes in GDPR and Their Impact on Indian Corporates
Future changes may include:
- More severe data localization requirements.
- Improved rights for individuals whose data is processed.
The Changing State of Global Data Privacy
Globally data protection norms are tightening and are impacting businesses around the globe.
The Commercial Foundation: Preparing for cross-jurisdictional data transfers and localization
Indian firms must:
- Implement mechanisms such as Standard Contractual Clauses (SCCs).
Conclusion
Due to the extensive reach of GDPR, Indian corporates must implement strong data protection mechanisms. While such compliance does bring challenges, it also creates monumental opportunities for businesses in the global market. For small and medium-sized enterprises (SMEs) in India fines for non-compliance under the GDPR can range from 2% to 4% of the total global annual revenue (depending on the type of breach).
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