US wants to ensure India's data localisation plan doesn't stymie growth in transactions: Mnuchin

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The US wants India to ensure that its data localisation plan does not "stymie growth” and American financial transaction companies are treated "fairly", Treasury Secretary Steven Mnuchin has said. Mnuchin also insisted that America has no problem if countries want to have local data for regulatory purposes as long as they do not eliminate it outside the country.

Data localisation is the practice of physically storing data on servers located within a country’s territory. The Reserve Bank of India had, in April last year, asked payment firms to ensure their data were stored exclusively on local servers, setting a tight six-month deadline for compliance.

US firms like Google, Mastercard, Visa and Amazon have lobbied against data localisation rules around the world including India, stressing that it would make their operations more complicated and costly. The issue is one of the sticking points between India and the US in their trade negotiations.

Mnuchin, who was recently in India, said that this had been an issue of discussion between the two countries. The US has been in conversation with India on the issue of data localisation, Mnuchin told members of the House Financial Services Committee during a Congressional hearing on Thursday.

"In my recent trip, we've had very specific conversations. We've been dealing with them over the last year on this issue. We want to make sure, one, that US companies are treated fairly and can compete,” he said.

"We have no issues with if countries want to have local data for regulatory purposes they do that. It's the issue of then eliminating data outside it, and I think, as you know, we're in a global economy,” Mnuchin said.

"So this is a complicated issue that we continue to work on to make sure that our financial services companies are treated fairly,” said the Treasury Secretary in response to a question from Congressman David Frank Kustoff.

"We've read the press accounts about how India is trying to raise the bar as it relates to the data localisation, and frankly the restrictions on free trade as it relates to startups and other companies.

Can you talk about what the barriers are for US companies operating now in India and what effect that could have?” Kustoff asked. Describing data security as an issue of critical importance, Mnuchin said the US wants to make sure that data localisation “doesn't stymie growth” in transactions.

The Indian government on Wednesday approved the Personal Data Protection Bill that will spell out a framework for handling of personal data including its processing by public and private entities.

The bill is likely to contain broad guidelines on collection, storage and processing of personal data, consent of individuals, penalties and compensation, code of conduct and an enforcement model.

A company's executive in-charge of conduct of the data business would face a jail term of up to three years if found guilty of knowingly matching anonymous data with publicly available information to find out the identity of an individual -- called as 're-identify de-identified data' in technical parlance.

Social media companies will be required to come up with a mechanism to identify users on their platform who are willing to be identified on a voluntary basis.

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