US wants to prohibit data localisation, top trade official says amid looming RBI directive

The US wants to prohibit data localisation to ensure that there is a free flow of information across borders, a senior Trump administration official has said, amidst reports that major American IT companies are up in arms against the latest Indian directive which kicks off next week.

Data localisation is an act of storing data on any device that is physically present within the borders of a particular country where the data was generated.

The Reserve Bank of India (RBI), in a circular in April, said all system providers will have to ensure that the entire data relating to payment systems operated by them are stored in a system only in India. It gave time till October 15 to comply with the mandate.

"We want to have prohibitions on data localisation to ensure that there's free flow of information, free flow of data across borders, disciplines around countries requiring companies to give up their source code, permanent ban on taxation or duties on digital transmissions," Dennis Shea, Deputy US Trade Representative and US Ambassador to the WTO, told a Washington audience on Friday.

"And by the way, South Africa and India want to rethink the current moratorium on those duties," Shea said in response to a question at the Center for Strategic and International Studies (CSIS), a top American think-tank.

American financial companies are believed to have approached the administration against an RBI directive which, beginning October 15, requires them to store in India any payment-related data from transactions that take place inside the country.
India has rejected their request of mirroring.

"If implemented, this policy will put an unnecessary burden on American companies and hurt consumers, who will endure higher costs and increased cybersecurity risks," Republican Strategist Andy Surabian, who is also a political adviser to Donald Trump Jr, wrote in BreitBart News this week.

"And they are planning to do all of this in spite of the unprecedented level of economic support the US has provided India over the course of decades. The Trump administration should stand up to these reckless actions, just like they have done in other situations when Americans were getting bullied and pushed around," Surabian demanded. During his CSIS appearance, Shea did not specifically pointed out India on the data localisation issue, but made his views pretty clear where the Trump administration stands on this issue.

Shea said the US is very engaged at the multilateral issue and has a very high-ambition approach to that.

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The general view is that the negotiation part of this process may begin early next year, or perhaps a ministerial statement around Davos.

Other members of the WTO, he said, have lower ambitions so "how this works out still remains to be seen," he added.

Mobile messaging platform WhatsApp has said it has built a system that stores payments-related data in India, in line with RBI's data localisation policy.