Electronic silk road important for economic development

20 May 2014

http://orfonline.org/cms/sites/orfonline/modules/report/ReportDetail.html?cmaid=66880&mmacmaid=66881

Pointing out that even in the most information repressive regime of China and Iran, people continue to use foreign services, by-passing the local law enforcement, Dr. Anupam Chander, Professor of Law at UC Davis and Director of the California International Law Center, has reiterated the significance of free internet for entrepreneurship and economic development. 

In support of his arguments, Dr Chander pointed out the examples of success stories like that of WhatsApp, which exclusively relied on global infrastructure and outsourcing. 

Dr Chander was speaking at a conference on "Breaking the Web? Data Localization Versus Global Internet" at Observer Research Foundation in Delhi on May 2, 2014. 

Welcoming the panellists, Mahima Kaul, Fellow, ORF, raised several important questions on how to reconcile different views on data localisation for protecting local industries vs. Internet as a free platform for global trade especially in today’s Indian context. 

Making his presentation, Dr. Chander, who in his latest book "The electronic silk road" has dealt in detail with topics related to the day’s discussion, described the two generations of border control on data. The first controls the incoming information to a particular country (censorship regime); and the second controls the outgoing information (data localisation efforts), which according to him, is far broader in scope than the former. 

Dr. Chander presented a quick review of nine jurisdictions he had scrutinised for the protocols on internet, for a better grasp of data controls prevalent across the globe. He explained the varied nature of data control legislations world-wide and its consequences. He critiqued the Indian legislation, by which the transfer may be allowed only if it is necessary for the performance of the lawful functioning of the corporate body. The argument was that the consent from the authorities is subjective as it is difficult to prove the necessity of outsourcing information per se. He added that the existing rules could have perverse effects on the incoming data from foreign countries. He supported his statement with a specific rule which necessitated the consent of data subject in order to process the data coming from foreign countries in India. This effectively discourages foreign investments in India. 

He then went on to explain with detailed illustrations, the inefficacy of data controlling or localization in fulfilling any of the well-recognized rationales to control data. He scrutinized each of them separately and argued that over the time it will be clear that global competition, rather than protectionism, facilitates data security and privacy. 

Dr. Chander concluded his presentation on a rather concerned note about the dangerous synergy of total control over the local environment that the two generations of "data passports" can create, especially in the recent context of a Russian social network CEO forced to quit and flee the country because of the unethical demands from the government for personal information of the citizens. 

Dr Govind, CEO, National Internet Exchange of India (NIXI), emphasized on the need for a balanced approach, taking into account the developmental and economic aspects and the dire requirement of safety and security of internal data. He said incidents like the BGP routing mishaps in Indonesia and Moscow that resulted in hazardous one-way flow of data show the increasing vulnerability of core infrastructure which in a way demands balkanisation. Besides, the Snowden effect and the role of internet in recent socio-political uprisings have led several countries to seek methods of data localization. 

Mr. Partha Sarathi Guha Patra, Vice President & Head-Corporate Affairs, Wipro, gave an industrial perspective to the issue and agreed with Dr. Govind’s opinion on adhering to a middle path, notwithstanding the fact that any localization effort would prove detrimental to the way global business takes place especially with regard to economic integration. He also suggested that the causes (national security, data privacy and economic considerations) need to be addressed rather than the effects (data localization vs. global internet). 

Mr Rahul Jain, Principal Consultant, Data Security Council of India (DSCI) while clarifying the general stand of DSCI against data localisation or internet balkanisation, established some specific concerns of India that favour data localisation which are based on technical interactions with law enforcement, policy-making, intelligence and other relevant government agencies. His main points covered the issue of jurisdiction; especially the lawful access to data in an e-commerce environment, incompatibility of global instruments like the Mutual Legal Assistance Treaty (MLAT) and the Budapest Convention Treaty with developing countries’ scenario and the chain of custody in cyber-forensics. In light of these concerns, the government will definitely try to establish its sovereignty through data localisation. From the industry point of view, DSCI recommendation is to appreciate the concerns of local authorities and to respect the local law irrespective of the data storage location. 

Dr Anupam Khanna, Chief Economist and Director General (Policy outreach), NASSCOM, highlighted the economic considerations of the topic. He said that the ICT industry (service exports), which is undoubtedly one of the few areas where India breaks out of the crowd, is intertwined with cross-border data flows. Conventional leaders in the business such as IBM, Microsoft and HP are having to readjust themselves presently due to the emergence of ’SMAC’ (Social Media, Mobility, Analytics and Cloud). He opined that India should take this opportunity to break into bigger businesses. He suggested that protocols need to be developed based on effective categorization of data in order to avoid perverse consequences. He also reiterated the importance of key security concerns and law enforcement, a sentiment which was echoed in the room.

After presentations, the panel had an engaging interactive session with the audience while addressing their questions and comments. 

(This report is prepared by Kaveri Ashok, Research Intern, Observer Research Foundation, Delhi)