Can affect FTA talks

The European Union has picked holes in India’s data security system and suggested that a joint expert group be set up to propose ways on how the country should tighten measures to qualify as a data secure nation.

The development can deal a blow to the India-EU free trade agreement negotiations as recognition as a data secure nation by the EU is a key demand from India.

“The recent communication from the EU Justice Department is worrying for us as it indicates that the EU is not willing to offer us data secure status till we make changes in our systems. This could take a long time as it may also require legislative changes,” a Commerce Department official told Business Line.

Lack of recognition as data secure country by the EU prevents high-end outsourced business from flowing to India as the 27-member nation puts several restrictions related to data flow on such countries.

The India-EU talks for a Broad-based Trade and Investment Agreement launched in 2006 has slowed after gathering momentum last year with neither side willing to move on the “last mile” issues. While the EU wants greater commitments from India for opening up sectors such as insurance, retail and automobiles, India has been unhappy with what it has been offered in areas such as visas for professionals and information technology.

The EU’s Justice Department had commissioned a consultant study to assess the data adequacy of the Indian system following New Delhi’s request for recognition as a data secure nation. Although the study has not yet been handed over to India, it has been indicated that gaps have been identified in Indian laws and it is not clear at this stage if these would require amendments.

The EU, therefore, wants a joint dialogue between representatives from India and a group of experts from various national data protection authorities of the EU member-states to point out what India needs to do to upgrade. “It is very clear that the EU is not in any hurry to give us data secure status. This would hamper the trade talks further,” the Official said.

European companies doing outsourcing business with countries not certified as data secure have to follow stringent contractual obligations that increase operating costs and affect competitiveness.

Outsourcing business from the EU could jump to $50 billion annually from the existing $20 billion in a short time once India gets recognised as a data secure destination, according to Data Security Council of India, an independent self-regulatory organisation set up by IT body Nasscom.

amiti.sen@thehindu.co.in

(This article was published on June 15, 2013)
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