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Introduction

The Digital Personal Data Protection (DPDP) Act, 2023 marks a transformative shift in India’s approach to data privacy. It empowers data principals with control over their personal data and mandates explicit consent mechanisms. However, as India prepares for its rollout, regulatory fragmentation, legacy system constraints, and legal ambiguities present key challenges to its effective implementation.

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How DPDP Act, 2023 Strengthens Privacy and Empowers Data Principals

• Explicit, Informed, and Revocable Consent: Data principals gain the right to decide how their personal data is collected and used, replacing implied or bundled consent practices.
• Right to Data Erasure and Correction: Individuals can request correction or erasure of personal data, enhancing their control over digital identity.
  Eg: Users can withdraw data from platforms no longer in use or request correction of outdated financial records.
• Mandated Data Breach Notification: The Act requires organisations to notify individuals and authorities in case of data breaches.
• Data Traceability and User Controls: Platforms are now required to incorporate data traceability and user control features in product design.
  Eg: Legacy systems must adapt to offer opt-out options and detailed usage logs.
• Restricting Cross-Border Data Transfers: Governments may restrict data transfers to certain countries, enhancing sovereign control over sensitive data.
  Eg: Ensures personal data is not stored in jurisdictions lacking adequate privacy safeguards.
• Creation of the Data Protection Board: An independent adjudicating body will handle complaints and impose penalties, offering users recourse.
• Accountability for Data Fiduciaries: Platforms must redesign practices to prioritise privacy by design and maintain organisational accountability.
  Eg: Ecommerce and fintech companies must now align backend architecture with user privacy expectations.

Key Implementation Challenges

• Legacy System Incompatibility: Existing IT systems may lack features for data traceability or revocable consent.
  Eg: Public utilities and older fintech platforms may require expensive upgrades.
• Cross-Border Cloud Compliance: Data localisation or restricted data transfers complicate global Cloud operations.
  Eg: Multinational firms using global Cloud infrastructure face compliance bottlenecks.
• Anonymised Data Loophole: The Act excludes anonymised data, yet modern tools can re-identify individuals from such data.
  Eg: AI systems using pseudonymised data may still create detailed personal profiles.
• Ambiguity in Data Breach Reporting: Lack of clarity on what constitutes a breach and when to report it causes hesitation.
• Litigation and Grievance Overload: Courts may be overwhelmed by cases unless alternative redressal systems are institutionalised.
• Eg: India might consider sector-specific redress forums or Fast-track digital tribunals to prevent courts from becoming overwhelmed. 
• Inconsistent Regulatory Interpretation: Multiple regulators (RBI, SEBI, UIDAI) may interpret provisions differently without harmonised guidelines.
  Eg: Businesses face confusion in aligning with sector-specific and general data protection norms.
  

Measures to Balance Personal Data Rights and Implementation Challenges

• Regulatory Harmonisation Across Sectors: Establish a unified framework among sectoral regulators to resolve conflicting mandates.
  Eg: Joint advisories between RBI and the Data Protection Board.
• Phased and Sector-Specific Implementation: Roll out DPDP provisions in phases with special rules for critical sectors (e.g., health, finance).
  Eg: Inspired by Singapore’s Personal Data Protection Act model.
• Clarify Scope of Anonymised Data Use: Issue specific guidelines for the use of AI and analytics that rely on pseudonymised data.
• Establish Fast-Track Redress Mechanisms: Create digital tribunals or ombudsperson systems for speedy grievance resolution.
• Capacity Building for Businesses and Startups: Offer toolkits, training, and compliance sandboxes to help smaller firms align with DPDP.
• Invest in Public Awareness and Literacy: Run campaigns to educate users on their rights, consent management, and grievance procedures.

Conclusion

The DPDP Act, 2023 is critical for protecting digital rights. However, its success depends on implementation. With regulatory clarity, user-centric design, and coordinated efforts across sectors, India has the opportunity to become a global benchmark for data privacy and trust.

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