Let data embassies come up across the country, not at GIFT IFSC alone: Industry

Yotta Infrastructure and ST Telemedia Global Data Centres have said that the policy will bring investments to India if the government goes for a nation-wide rollout.

“We are working on a representation to the government on data embassies and are very excited about this. But we think it (data embassy) should be set up wherever a country asks for it, anywhere in India. It should not be restricted to one place,” Darshan Hiranandani, chairman, Yotta Infrastructure, told ET.

For example, somebody may want a main site and a disaster recovery site, Hiranandani, who is also chair, Data Centre Council of the Associated Chambers of Commerce told ET.
“Transporting data to only one place in the country may be hard. Just like a consulate can take up space anywhere in the country, it should be left to the data embassy on where they want to set up,” he said.

Finance minister Nirmala Sitharaman in her budget proposals said: “For countries looking for digital continuity solutions, we will facilitate setting up of their data embassies in GIFT IFSC.”

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Gujarat International Finance Tech-city (GIFT) is India’s first International Financial Services Centre (IFSC). “The government should nominate different regions or special economic zones (SEZs) across India for data embassies, whether it is Noida, Mumbai or any other locations which are considered appropriate for data embassies,” Lalit Khanna, general counsel, ST Telemedia Global Data Centres, told ET.

The government should not limit it to only one region like GIFT IFSC, he said.

Moreover, the data to be stored there should only relate to citizens of countries other than India to avail of immunity from local regulations, he added.

If governments of other countries are provided this assurance, it will expand the data centre business in India, be it hyper-scalers, private or government agencies, he said.

Countries which do not have power feasibility or space constraints will prefer to store data in such data embassies, he added.

Vinayak Godse, CEO of the Data Security Council of India (DSCI), said “assurance over data security, data privacy and resiliency” would make the concept work.

The Vienna Convention on Diplomatic Relations gives scope for such arrangement, he said. “This is how Luxembourg became host of a data embassy for Estonia,” Godse said.

ET reported last week that the Centre may soon notify a policy permitting countries and corporations to set up data embassies within India to offer diplomatic immunity from local regulations for national and commercial digital data.

Hiranandani, however, said it should be a national concept.

Singapore, for example, may want a Chennai site because it is close to the submarine cables there. Somebody may want a disaster recovery site in a different seismic zone, or take possible flooding in that area into account, he added.

For instance, if a data embassy can be permitted to be set up in Uttar Pradesh, it would benefit Nepal in terms of proximity.

Some data centre operators also said proximity to unstable neighbours may not be conducive for setting up a data embassy.

Sunil Gupta, co-founder and CEO of Yotta Infrastructure, took to LinkedIn to say, “Taking a cue from several European countries, the Indian government has indicated the provisioning of data embassies… Although the concept of data embassies is not a new one, successful implementation of this policy in India could mean a paradigm shift in the country’s positioning on the global data infrastructure map.”

Like immunity from local laws for foreign missions in India, the framework will extend immunity from local data laws to foreign data stored in Indian data centres – thus encouraging countries to look at India as a safe haven for data storage and processing, along with the freedom to operate the data centre as per their homeland laws, he said.

The step will expand the role of the Indian data centre and cloud ecosystem and provide a fillip to its growth, Gupta said, adding that further details that will help gauge the decision better are awaited.

“Regardless, the underlying message for the data centre industry is loud and clear – to prepare itself for the next wave of data storage needs by increasing capacities, elevating security to global standards, and ensuring quality that’s second to none,” he said in the post.

The idea of a data embassy is intriguing as long as the process for approvals and any related costs are not too onerous, said Richard Rossow, senior adviser and Wadhwani Chair, US-India Policy Studies, Centre for Strategic and International Studies.

“Certainly, applying multiple sets of national privacy laws to the data of a single customer is problematic—providing easy, and blanket exemptions is in India’s commercial interest,” Rossow said.

If it forces data firms to establish separate facilities or other onerous provisions, it could disincentivise future investments, he said, adding geographical restrictions can also have a cooling effect on investors.