45% startups and SMEs oppose the Government’s right to seek anonymised data of their customers and suppliers

January 21, 2020, New Delhi: Various startups and SMEs have actively been discussing the proposed data rules in the LocalCircles business circles for the past few months and have given many inputs so far. To quantify the pulse of startups and SMEs, LocalCircles conducted a survey to assess what they feel about the proposed bill. LocalCircles conducted a survey in its online small business communities to check their pulse on the anonymised data sharing clause in the Personal Data Protection Bill. The survey received 4,923 responses from various startups, SMEs and entrepreneurs.

The Personal Data Protection Bill defines a framework for handling of personal data including its processing by various public and private companies and gives the Indian Government the right to seek anonymised data of citizens from any business or company at any time. Startups, SMEs and various entrepreneurs were asked if they were okay with sharing the anonymised data of their customers and suppliers with the Government. 45% said they were against it while 45% said they were okay with it. 10% were unsure about it.

Businesses divided on whether Government should have the right to seek anonymised data of their customers and suppliers

Startups and SMEs also came together to share some of their concerns on the draft bill. Some of the pertinent ones are listed below.

Sharing of aggregate data with overseas entities and group companies

On the data sharing front, many startups operate in new areas and bring about an innovation in product, technology intervention or service and many of the cutting-edge technologies are still developed overseas.

As a result, many startups need access to overseas resources, expertise, tools and capital because not all of them are available in India. Therefore, an Indian startup may need to open an office overseas and hire resources there to develop their product or service and in many cases will have a need to share aggregate data between resources and legal entities. Therefore, it is imperative that aggregate data of Indian startups be permitted to be shared with atleast their entities and group companies they have overseas. Similarly, if a foreign company acquires an Indian startup, they may have plans to take the product/service developed by the startup and scale it further globally and hence would require access to aggregate data of the startup.

Government access to aggregate data and algorithms of businesses

On the subject of Government’s rights over the aggregate data of businesses, according to the startups opposing, this should only be permitted in the event of a law-order, investigation or enforcement situations. For routine matters, Government should have access to neither the aggregate data nor the algorithms used by a business as such an access can be easily misused or compromised.

Protecting the value proposition of businesses

Many startups state that they spend significant amounts of resources to collect data, build products and services and a market and for many technology driven startups the aggregate data and the corresponding insights is their core value proposition and they run the risk of loosing it with sharing of their aggregate data.

Risk of violation of Terms and Conditions with existing customers

Some of the startups have indicated that they would be willing to share aggregate data only if an explicit customer consent is taken without which they are in violation of their terms and conditions with the existing customers.

LocalCircles will be sharing the findings of this report with Parliamentary Committee on IT, MEITY and DPIIT, so the collective feedback on data can be considered before the Personal Data Protection Bill, Anonymised Data Governance rules and eCommerce policy are finalised.