Context :

• India’s hopes for retaining the right to implement data localisation laws remain alive as Indian negotiators on Thursday declined to agree to the e-commerce chapter of the Regional Comprehensive Economic Partnership (RCEP) agreement.

About the Issue

• The e-commerce chapter contains clauses that, if India had agreed to them, would have prevented it from implementing data localisation rules on companies doing business in India. 
• The section on transfers of information and processing of information says that “a party shall not take measures that prevent transfers of information, including transfers of data by electronic or other means, necessary for the conduct of the ordinary business of a financial service supplier.”
• However, the same section also says that “nothing in paragraph 2 [the paragraph containing the previous clause] prevents a regulator of a party for regulatory or prudential reasons from requiring a financial service supplier to comply with domestic regulation in relation to data management and storage and system maintenance, as well as to retain within its territory copies of records.”
• This basically means that India cannot be prevented from asking financial companies to maintain a copy of their data within India, but it is unclear still whether India can mandate that such data must only reside within the country.

Source: TH