Singapore is among the countries that is “actively looking” at GIFT City in Gujarat to set up a Data Embassy that will help set up a secure facility for storing, managing and protecting critical sovereign data assets from external cyber and physical threats.
“Currently it is Singapore that is actively looking at setting up a Data Embassy in GIFT City. They had already voiced their intentions in public,” Dipesh Shah, Executive Director, department of development, International Financial Centres Authority (IFSCA) told businessline.
These data storehouses leverage advanced cyber security measures and physical security protocols to safeguard data against cyber threats, unauthorised access and geopolitical risks. By establishing data embassies, governments and organisations aim to enhance data security, ensure regulatory compliance and foster international cooperation in data management.
The setting up of Data Embassies in GIFT City was first mentioned during the Union Budget 2023. The establishment of data embassies in GIFT IFSC will primarily be facilitated in the form of bilateral agreements between India and the interested countries, stated the Union government as part of its interim budget announcements in 2024. However, crucial amendments from the Government of India have been pending for more than a year now.
When asked what amendments await the setting up of Data Embassies, Shah said, “A separate law can be brought in for providing Data Embassies with immunity, that will be similar to the immunity enjoyed by Indian embassies abroad. Local laws won’t apply in this case,” Shah added.
Similar to diplomatic embassies, these data embassies will operate under the jurisdiction and protection of the host country, providing safe haven for sensitive information that requires security and regulatory compliance. They also provide immunity from local laws of the host country.
Data sharing agreements and bilateral treaties between countries are also needed for hosting Data Embassies, says Akshaya Suresh, Partner, JSA Advocates & Solicitors. “A specific policy on data embassies needs to be promulgated in India to provide legal clarity on jurisdiction over the data stored in a Data Embassy, any minimum investment commitments required, obligations of the host country and any emergency access provisions for the host country. Bilateral treaties between the host country and the customer country on these matters and any data sharing agreement for law enforcement purposes may also be needed. While the Indian Digital Personal Data Protection Act 2023 and the Draft Rules released thereunder provide for data localisation in certain circumstances, it does not address data embassies in any way,” Akshaya Suresh said.
According to a Gujarat government official who did not wish to be named, setting up data embassies in the country will need more clarity related to the size of data centres necessary for the purpose and what can constitute a Data Embassy in India.
The official said that globally data embassies have become a viable option to store copies of critical state information in a foreign territory in case the main servers back home get compromised. Maintaining such databases is important to keep government services running in a secure overseas location.
This lure of regulatory immunity will also promote significant investment in India’s data industry and will be a larger plan to develop a “trusted” data storage ecosystem in India.
Arun Prabhu, Partner (Head-Technology), Cyril Amarchand Mangaldas, a Mumbai-based law firm, says India can become the world’s “data banker” by serving as a “trusted” repository for foreign data.
“Both current and proposed laws recognise to some extent that data embassies which host foreign data should not be regulated in the same manner as domestic operations. The creation of a clear ‘special zone’ to enable data embassies and the ability to ensure that data stored in them, will not be accessed without a strong reason, can go a long way in enabling this ecosystem,” Prabhu said.
“In addition to the obvious direct economic benefits of establishing hyperscale storage and compute infrastructure in India, as well as associated consumption of telecommunication capacity, Data Embassies also enable creation of associated innovation ecosystems including AI and Machine Learning, Big data and other development,” he added.