DATA PROTECTION

LAWS OF THE WORLD

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INDIA

Last modified 31 December 2020

LAW

At present, the Information Technology Act, 2000 (the Act) and rules notified thereunder largely govern data protection in India.

On August 24, 2017, a Constitutional Bench of nine judges of the Supreme Court of India in Justice K.S.Puttaswamy (Retd.) v. Union
of India [Writ Petition No. 494/ 2012] upheld that privacy is a fundamental right, which is entrenched in Article 21 [Right to Life &
Liberty] of the Constitution. This led to the formulation of a comprehensive Personal Data Protection Bill 2019 (the PDP Bill) 1.
The enactment of the PDP Bill will overhaul the personal data protection and regulatory regime in India. Until such time, the Act
and rules provided therein govern data privacy in India. The PDP Bill is currently pending consideration of the Indian Parliament
and may undergo significant changes to its current form, based on a report submitted by a Joint Parliamentary Committee formed
to analyse the PDP Bill. The PDP Bill is expected to come into effect towards the end of 2021.

India’s IT Ministry adopted the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data
or Information) Rules (Privacy Rules), notified under the Act. The Privacy Rules, which took effect in 2011, require corporate
entities collecting, processing and storing personal information, including sensitive personal information, to comply with certain
procedures. It distinguishes both ‘personal information’ and ‘sensitive personal information’, as defined below.

In August 2011, India’s Ministry of Communications and Information issued a ‘Press Note’ Technology (Clarification on the Privacy
Rules), which provided that any Indian outsourcing service provider/organization providing services relating to the collection,
storage, dealing or handling of sensitive personal information or personal information under contractual obligation with any legal
entity located within or outside India is not subject to collection and disclosure of information requirements, including the consent
requirements discussed below, provided that they do not have direct contact with the data subjects (providers of information)
when providing their services.

As stated above, India is in the process of overhauling its personal data protection regime. However, there is a possibility of a new
regulatory framework for non-personal data in India. The Ministry of Electronics & Information Technology in the year 2019
formed a committee to make recommendations for the consideration of the Central Government on the regulation of
non-personal data (NPD) and released its report on non-personal data governance framework (the NPD Report). The NPD
Report defines NPD as data which is not personal data as defined under the PDP Bill or data without any personally identifiable
information. The NPD Report, among others, recommends that appropriate standards of anonymization of NPD be defined to
prevent/minimize the risks of re-identification. It remains to be seen if NPD will also be regulated under the PDP Bill and how it
will impact various stakeholders.

Note 1: This Bill was introduced in the Lower House of the Parliament on December 11, 2019. It proposes a legal framework to
protect the autonomy of individuals in relation to their personal data, to specify where the flow and usage of personal data is
appropriate, to create a relationship of trust between persons and entities processing their personal data, to specify the rights of

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individuals whose personal data are processed, to create a framework for implementing organizational and technical measures in
processing personal data, to lay down norms for cross-border transfers of personal data, to ensure the accountability of entities
processing personal data, to provide remedies for unauthorized and harmful processing, and to establish a Data Protection
Authority for overseeing processing activities. The PDP Bill is pending consideration of the Indian Parliament.

DEFINITIONS

Definition of personal data

The Privacy Rules define "personal information" as any information that relates to a natural person, which either directly or
indirectly, in combination with other information that is available or likely to be available to a corporate entity, is capable of
identifying such person.

Definition of sensitive personal data

The Privacy Rules define "sensitive personal data or information" to include the following information relating to:

Passwords

Financial information eg, bank account/credit or debit card or other payment instrument details

Physical, physiological and mental health conditions

Sexual orientation

Medical records and history

Biometric information

Any detail relating to the above clauses as provided to a corporate entity for providing services

Any of the information received under the above clauses for storing or processing under lawful contract or otherwise

Biometrics means the technologies that measure and analyze human body characteristics, such as fingerprints, eye retinas and
irises, voice patterns, facial patterns, hand measurements and DNA for authentication purposes.

However, any information that is freely available in the public domain is exempt from the above definition.

NATIONAL DATA PROTECTION AUTHORITY

No such authority exists.

REGISTRATION

No requirement.

DATA PROTECTION OFFICERS

Every corporate entity collecting sensitive personal information must appoint a Grievance Officer to address complaints relating to
the processing of such information, and to respond to data subject access and correction requests in an expeditious manner but
within one month from the date of receipt of the request or grievance.

There is no specific requirement that the data protection officer must be a citizen of or resident of India, nor are there any
specific enforcement actions or penalties associated with not appointing a data protection officer correctly. However, appointment
of a data protection officer is part of the statutory due diligence process and it is thus imperative that such an officer should be
appointed.

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COLLECTION & PROCESSING

Under the Act, if a corporate entity that possesses, manages or handles any sensitive personal information in a computer resource
that it owns, controls or operates, is negligent in implementing and maintaining compliance with the Privacy Rules, and its
negligence causes wrongful loss or wrongful gain to any person, the corporate entity shall be liable for damages to the person(s)
affected.

The Privacy Rules state that any corporate entity or any person acting on its behalf that collects sensitive personal information
must obtain written consent (through letter, email or fax) from the providers of that information. However, the August 2011
Press Note issued by the IT Ministry clarifies that consent may be given by any mode of electronic communication.

The Privacy Rules also mandate that any corporate entity (or any person, who on behalf of such entity) that collects, receives,
possess, stores, deals or handles information shall provide a privacy policy that discloses its practices regarding the handling and
disclosure of personal information, including sensitive personal information, and ensure that the policy is available for view,
including on the website of the corporate entity (or the person acting on its behalf). Specifically, the corporate entity must ensure
that the person to whom the information relates is notified of the following at the time of collection of sensitive personal
information or other personal information:

The fact that the information is being collected

The purpose for which the information is being collected

The intended recipients of the information

The name and address of the agency that is collecting the information and the agency that will retain the information

Further, sensitive personal information may only be collected for a lawful purpose connected with a function or purpose of the
corporate entity and only if such collection is considered necessary for that purpose. The corporate entity must also ensure that it
does not retain the sensitive personal information for longer than it is required and should also ensure that the sensitive personal
information is being used for the purpose for which it was collected.

A corporate entity or any person acting on its behalf is obligated to enable the providers of information to review the information
they had so provided and also to ensure that any personal information or sensitive personal information that is found to be
inaccurate or deficient is corrected upon request. Further, the provider of information has to be provided a right to opt out (ie,
he/she will be able to withdraw his or her consent) even after consent has been provided. However, the corporate entity will not
be held responsible for the authenticity of the personal information or sensitive personal information given by the provider of
information to such corporate entity or any other person acting on its behalf.

TRANSFER

The data collector must obtain the consent of the provider of the information for any transfer of sensitive personal information to
any other corporate entity or person in India, or to any other country that ensures the same level of data protection as provided
for under the Privacy Rules. However, consent is not necessary for the transfer if it is required for the performance of a lawful
contract between the corporate entity (or any person acting on its behalf) and the provider of information or as otherwise
specified in the Act.

A corporate entity may not transfer any sensitive personal information to another person or entity that does not maintain the
same level of data protection as required by the Act.

The contract regulating the data transfer should contain adequate indemnity provisions for a third party breach, should clearly
specify the end purposes of the data processing (including who has access to such data) and should specify a mode of transfer that
is adequately secured and safe.

Further, under the Act, it is an offense for any person who has pursuant to a contract gained access to any material containing

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personal information to disclose that information without the consent of the person concerned, and with the intent to cause or
knowing that he is likely to cause wrongful loss or wrongful gain.

Thus, contracts should also specifically include provisions:

Entitling the data collector to distinguish between ‘personal information’ and ‘sensitive personal information’ that it wishes
to collect/process, and

Representing that the consent of the person(s) concerned has been obtained for collection and disclosure of personal
information or sensitive personal information, and outlining the liability of the third party

Data Localization

India’s central bank, the Reserve Bank of India (RBI) has made it mandatory from October 15, 2018, for all payment system
providers and their service providers, intermediaries, third party vendors and other entities in the payment ecosystem to ensure
that all data relating to payment systems operated by them are stored in a system only in India. Interestingly, by virtue of this
regulation, RBI is seeking storage of all payment system data, which includes the entire payment processing cycle from request to
final payout.

SECURITY

A corporate entity possessing, dealing or handling any sensitive personal information in a computer resource which it owns,
controls or operates is required to implement and maintain reasonable security practices and procedures to secure the sensitive
personal information. The reasonable security practices and procedures may be specified in an agreement between the parties.

Further, the Privacy Rules provide that in the absence of such agreement ‘reasonable security practices and procedures’ to be
adopted by any corporate entity to secure sensitive personal information are procedures that comply with the IS/ISO/IEC 27001
standard or with the codes of best practices for data protection as approved by the federal government. Presently, no such codes
of best practices have been approved by the federal government.

BREACH NOTIFICATION

The government of India has established and authorized the Indian Computer Emergency Response Team ("Cert-In") to collect,
analyze and disseminate information on cyber incidents, provide forecasts and alerts of cybersecurity incidents, provide emergency
measures for handling cybersecurity incidents and coordinate cyber incident response activities.

The Information Technology (the Indian Computer Emergency Response Team and Manner of Performing Functions and Duties)
Rules, 2013 ("Cert-In Rules") impose mandatory notification requirements on service providers, intermediaries, data centers and
corporate entities, upon the occurrence of certain cybersecurity incidents.

Cybersecurity incidents have been defined to mean any real or suspected adverse events, in relation to cybersecurity, that violate
any explicitly or implicitly applicable security policy, resulting in:

Unauthorized access, denial or disruption of service

Unauthorized use of a computer resource for processing or storage of information

Changes to data or information without authorization

The occurrence of the following types of cybersecurity incidents trigger the notification requirements under the Cert-In Rules:

Targeted scanning or probing of critical networks or systems

Compromise of critical information or system

Unauthorized access of IT systems or data

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Defacement of websites or intrusion into websites and unauthorized changes, such as inserting malicious codes or links to
external websites

Malicious code attacks such as spreading viruses, worms, Trojans, Botnets or Spyware

Attacks on servers such as Database, Mail and DNS or network devices such as Routers

Identity theft, Spoofing and phishing attacks

Denial of service (DoS) and Distributed Denial of service (DDoS) attacks

Attacks on critical infrastructure, SCADA systems and wireless networks

Attacks on applications such as e-governance and e-commerce

Upon the occurrence of any of the aforementioned events, companies are required to notify the Cert-In within reasonable time,
so as to leave scope for appropriate action by the authorities. However, it is important to follow breach notice obligations, which
would depend upon the "place of occurrence of such breaches" and whether or not Indian customers have been targeted. The
format and procedure for reporting of cybersecurity incidents have been provided by Cert-In on its official website.

ENFORCEMENT

Civil penalties of up to approximately €555,930 (as at December 31, 2020) for failure to protect data including sensitive personal
information may be imposed by an Adjudicating Officer; damages in a civil suit may exceed this amount.

Criminal penalties of up to three years of imprisonment or a fine up to approximately €5,560 (as at December 31, 2020), or both
for unlawful disclosure of information.

ELECTRONIC MARKETING

The Act does not refer to electronic marketing directly. Dishonestly receiving data, computer database or software is an offense.
However, in a related development, the Food Safety and Standards Authority of India (FSSAI) has made it mandatory for
E-commerce FBOs (Food Business Operators) to obtain a license from the Central Licensing Authority. E-commerce FBO means
any Food Business Operator carrying out any of the activities in section 3(n) of Food Safety & Standards Act, 2006, through the
medium of e-commerce. Interestingly, section 3(n) covers the entire food chain as it defines “food business” as any undertaking,
whether for-profit or not, and whether public or private, carrying out any of the activities related to any stage of manufacture,
processing, packaging, storage, transportation, distribution of food, import and includes food services, catering services, sale of
food or food ingredients. Similarly, another set of legal Rules being referred as “E-commerce & the Legal Metrology (Packaged
Commodities) Amendment Rules, 2017,” effective from January 1, 2018, has made it mandatory for an e-commerce entity to
ensure mandatory declarations about the commodity displayed on the digital and electronic network used for e-commerce
transactions.

The consumer protection regime in India was recently overhauled by way of enactment of the Consumer Protection Act, 2019
(notified in July 2020) (CPA 2019). Under CPA 2019, sellers and service providers have the obligation to, among others, not
engage in unfair trade practices including by way of misleading advertisements. Further, Consumer Protection (E-Commerce)
Rules, 2020 (E-Commerce Rules) have been notified under the CPA to regulate e-commerce entities in India. An ‘e-commerce
entity’ has been defined to mean any person who owns, operates or manages digital or electronic facility or platform for electronic
commerce, but does not include a seller offering his goods or services for sale on a marketplace e-commerce entity. E-commerce
entities are required to set up a proper grievance redressal mechanism and consumer complaints should be acknowledged by the
grievance officer within a stipulated timeline. E-commerce entities are further required to, among others, provide information in
relation to refund, exchange, warranty, delivery, mode of payment, fees and charges, grievance process and other relevant
information on their platform. The price (total and a break up) of goods or services should be mentioned clearly and misleading
advertisements and misrepresentation are prohibited.

The Privacy Rules also provide the right to "opt out" of email marketing, and the company's privacy policy must address marketing
and information collection practices. Further, the National Do Not Call (NDNC) Registry is effectively implemented by the

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Telecom Regulatory Authority of India (TRAI). TRAI has also established the Telecom Commercial Communication Customer
Preference Portal, ie, a national data base containing a list of the telephone numbers of all subscribers who have registered their
preferences regarding the receipt of commercial communications. Telemarketing companies may lose their license for repeated
violation of DNC norms.

ONLINE PRIVACY

There is no regulation of cookies, behavioral advertising or location data. However, it is advisable to obtain user consent, such as
through appropriate disclaimers.

However, the IT Act contains both civil and a criminal offenses for a variety of computer crimes:

Any person who introduces or causes to be introduced any computer contaminant into any computer, computer system
or computer network may be fined up to approximately €555,930 (as at December 31, 2020) (by an Adjudicating Officer);
damages in a civil suit may exceed this amount. Under the IT Act, ‘computer contaminant’ is defined as any set of
computer instructions that are designed:

To modify, destroy, record, or transmit data or programs residing within a computer, computer system or
computer network, or

By any means to usurp the normal operation of the computer, computer system or computer network

Any person, who fraudulently or dishonestly makes use of the electronic signature, password or any other unique
identification feature of any other person, is subject to a prison term of up to three years and a fine up to approximately
€1,110 (as at December 31, 2020).

KEY CONTACTS

J. Sagar Associates
www.jsalaw.com/

Sajai Singh
Partner
J. Sagar Associates
T +91 80 435 03627
[email protected]

DATA PRIVACY TOOL

You may also be interested in our Data Privacy Scorebox to assess your organization's level of data protection maturity.

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