The Digital Personal Data Protection Act (DPDPA) 2023: India’s Move Towards Stronger Data Privacy

DPDPA 2023 is India's key step toward stronger data privacy. This blog covers its origins, key principles like consent-driven data processing, real-world data breaches that spurred its creation, and comparisons with global privacy laws. It also highlights how businesses can achieve compliance while safeguarding user privacy.

Data Privacy

Written by

Nivya Ajit

Published on

September 18, 2024

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Introduction

In this fast-evolving digital age, personal data has emerged as a valuable asset. But with increasing reliance on technology comes the challenge of protecting this data. Globally, data breaches have exposed over 5 billion records in 2021 alone, highlighting vulnerabilities that exist in even the most secure systems. India is no exception. In fact, the country witnessed over 1.4 million cybersecurity incidents in 2022, according to CERT-In.

With India’s digital economy rapidly expanding, it became essential for the government to step in and ensure that personal data is handled responsibly.

Enter the Digital Personal Data Protection Act (DPDPA) 2023 - a landmark regulation aimed at safeguarding citizens' privacy while allowing businesses to innovate responsibly in a data-driven economy.

A Brief History of Data Protection in India

India’s push toward protecting personal data began with a landmark Supreme Court judgment in 2017, where the court ruled that the right to privacy is a fundamental right under the Constitution. This ruling was pivotal in establishing the foundation for a more formal legal framework for data protection.

Soon after, the government set up Justice B.N. Srikrishna Committee to draft a comprehensive data protection law. The committee’s efforts culminated in the Personal Data Protection Bill of 2019, which was debated extensively by industry leaders and policymakers. After years of revisions, consultations, and public scrutiny, the Digital Personal Data Protection Act (DPDPA) 2023 was finally enacted. This Act now serves as India’s most comprehensive regulation on digital data protection.

What is the Digital Personal Data Protection Act (DPDPA)?

The DPDPA is a wide-ranging law that regulates how businesses—both Indian and foreign—collect, store, and process the personal data of Indian citizens. It applies not only to Indian companies but also to global corporations like Facebook, Google, and Amazon if they handle data of Indian residents.

This law introduces stringent obligations for Data Fiduciaries, ensuring that the collection and processing of data is transparent and consent-driven. A PwC survey found that 41% of Indian businesses are actively working toward aligning their practices with DPDPA compliance, but many still face significant challenges.

At Nyusta, we help businesses navigate these complexities by offering tailored solutions that ensure compliance without disrupting operations. Our expertise in global data protection laws like GDPR and CCPA enables us to offer practical, scalable solutions for businesses, large and small.

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Key Terminologies in the DPDPA

Understanding some key terms in the DPDPA is critical to navigating the law:

Data Principal: The individual whose data is being processed.
Data Fiduciary: The entity responsible for determining the purpose and method of data processing.
Consent Manager: A platform or entity that helps individuals manage their consent for data processing.

Nyusta helps businesses implement user-friendly consent management platforms that make compliance easier while empowering individuals to control their personal data.

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The Urgent Need for DPDPA: Lessons from Major Data Breaches

The DPDPA didn’t emerge in isolation—it was a response to real-world incidents that demonstrated the urgent need for stronger data privacy measures.

One striking example is the Aadhaar Data Leak of 2018, where the personal data of over 1.1 billion Indian citizens was reportedly exposed due to vulnerabilities in the system. Similarly, in 2021, a leading Indian airline suffered a data breach that compromised the personal data of 4.5 million passengers, including sensitive information such as passport numbers and payment details.

These incidents were wake-up calls. They showed not only the vulnerability of critical systems but also the far-reaching consequences of inadequate data protection. The DPDPA aims to address these issues head-on by holding companies accountable for how they handle personal data.

The DPDPA empowers individuals by giving them greater control over their personal data, ensuring that businesses must obtain clear and informed consent before processing it. This is a significant step toward rebuilding trust in digital services.

Core Principles of the DPDPA

Consent-Based Data Processing
The Data Protection and Privacy Act (DPPA) emphasizes the importance of consent. Businesses are required to obtain explicit consent from users before processing their data. This means that a simple "I agree" checkbox is not enough. Consent must be clear, informed, and easily revocable.
According to an EY report, 72% of Indian businesses encounter challenges in obtaining consent across multiple languages, which is particularly difficult in a linguistically diverse country like India. As a result, companies need robust systems to ensure compliance with this requirement.

Nyusta specializes in providing consent management solutions that are not only compliant but also user-friendly. We help businesses integrate these solutions into their operations.

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Data Minimization
One of the key principles of the DPDPA is that businesses should only collect the data they need for a specific purpose. According to a PwC report, 59% of Indian companies are currently reviewing their data collection practices to comply with these requirements. For instance, while an e-commerce platform may collect data on customer purchase habits, collecting biometric information may be unnecessary for such a service.

At Nyusta, we assist businesses in evaluating their data practices to ensure they follow the principles of data minimization without compromising functionality.

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Purpose Limitation
Another crucial aspect of the DPDPA is purpose limitation. This means that businesses must use data solely for the purpose for which it was collected. According to a Mondaq survey, 78% of Indian companies are updating their internal data policies to ensure compliance with this regulation.

For example, a ride-hailing app may collect location data to provide its services, but it cannot sell this data to advertisers unless the user has given explicit consent for such use.

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Transparency & Accountability
The DPDPA emphasizes transparency. Businesses need to be clear about the data they collect, the reasons for collecting it, and their intended use. According to an EY report, 60% of companies that improved their data transparency practices saw increased customer trust.

‍Nyusta helps businesses establish transparent and accountable data handling processes. This is not only for compliance but also to build trust with their customers.

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Comparing DPDPA with Global Data Privacy Laws

Country	Regulation	Key Rights	Data Transfer Rules	Penalties
India	DPDPA 2023	Right to Access, Correct, Erase, and Consent Withdraw	Cross-border data transfers unless blacklisted	Fines up to INR 250 crore ($30 million)
European Union	GDPR	Right to Access, Rectify, Erase, Data Portability	Strict rules; transfer only to countries with adequate protection	Up to €20 million or 4% of global annual turnover
California, USA	CCPA	Right to Know, Delete, and Opt-out of Sale of Data	No specific restrictions, but requires safeguards for protection	$7,500 per violation
Brazil	LGPD	Access, Correct, Erase, Data Portability	Transfers allowed with adequate protection	2% of global revenue, up to $10 million

With our extensive experience in global data privacy laws, Nyusta assists businesses in harmonizing their data protection strategies across multiple jurisdictions to ensure compliance with DPDPA, GDPR, CCPA, and other regulations.

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The Future of Data Privacy in India

The DPDPA is set to transform how businesses in India handle personal data. With increasing digitalization, consumer trust will become a key differentiator in the market. According to a PwC survey, 85% of consumers are more likely to engage with businesses that are transparent about their data practices.

The Act is also expected to fuel investments in data localization, creating opportunities for building local data centers and developing privacy-enhancing technologies. The global market for such technologies is projected to grow to $25 billion by 2025.

At Nyusta, we’re proactively gearing up to face these changes by investing in cutting-edge privacy technologies and helping our clients stay ahead of future data protection trends.

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Conclusion

The Digital Personal Data Protection Act (DPDPA) 2023 marks a turning point in India’s digital journey. By addressing the critical need for robust data protection, it not only protects individual privacy but also sets a strong foundation for a secure digital economy.

At Nyusta, we are committed to helping businesses navigate this evolving landscape. Our expertise in compliance and privacy technologies ensures that your business is not just meeting regulatory requirements but also building trust and loyalty with your customers.

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