Introduction

• India’s Digital Personal Data Protection Act, 2023 (DPDP Act), which received Presidential assent on August 11, 2023, marks a transformative step in the nation’s data privacy laws. 
• Following this, the Draft Digital Personal Data Protection Rules, 2025 provide essential details and an actionable framework to implement the provisions of the DPDP Act effectively. 
• These rules are designed to address the pressing need for comprehensive digital data protection in the face of rapid technological advancements and widespread data usage. 

Major Components of Data Protection Framework

• Data Principal: The data principal refers to the individual whose personal information is being processed. In the case of children, their parents or legal guardians are considered the data principals. Similarly, for individuals with disabilities, their legal guardians assume the role of the data principal.
• Data Fiduciary: The data fiduciary is the entity responsible for determining the purposes and means of processing personal data. This entity is also tasked with ensuring that the data remains accurate, secure, and is deleted once it is no longer necessary.
• Data Protection Board (Board): The Data Protection Board (Board) serves as the regulatory body overseeing compliance and addressing grievances. The Board is empowered by the Act, allowing the Chairperson and Members to make decisions on relevant matters, with decisions being made based on a majority vote.

Key Features of Draft Digital Personal Data Protection Rules 2025

• Notice to Data Principals:  Data Fiduciaries are obligated to provide clear and understandable notices to Data Principals, ensuring they are well-informed about the processing of their data. Notices should include:
  • A description of the personal data being processed.
  • The purposes of the data processing and the associated services.
  • Information on how Data Principals can withdraw consent, exercise their rights, or file complaints.
• Consent Management:
  • Informed Consent: The rules emphasize obtaining clear, explicit, and informed consent from Data Principals before processing their data. This consent can be withdrawn at any time.
  • Role of Consent Managers: Consent Managers will assist in managing the process of obtaining, tracking, and withdrawing consent efficiently, ensuring that the process remains seamless and transparent.
• Significant Data Fiduciaries (SDF): Additional obligations apply to SDFs, such as:
  • Conducting Annual Data Protection Impact Assessments and audits to ensure compliance.
  • Ensuring that algorithms do not violate the rights of Data Principals.
  • Restricting the transfer of certain data outside of India to protect national security.
• General Obligations: Data Fiduciaries are required to maintain transparency about data processing activities, publish terms of service, and provide grievance redressal mechanisms.
• Rights of Data Principals:
  • Access and Erasure: Data Principals have the right to access their personal data and request its erasure through the mechanisms provided by Data Fiduciaries.
  • Grievance Redressal: Data Fiduciaries must resolve grievances within specific timeframes, ensuring that Data Principals’ concerns are addressed swiftly.
  • Nomination: Data Principals can nominate another person to exercise their rights if they are incapacitated or after their death.
  • Transparency: Data Fiduciaries must provide clear and detailed information on how personal data is collected, processed, and shared.
• Processing of Data Outside India: 
  • Conditions for Transfer: Data transfers to foreign entities must comply with government-specific requirements. Certain restrictions apply, particularly when the data is deemed critical to national security.
• Processing Data for State Benefits:
  • The government may process personal data for issuing benefits like subsidies under specific legal frameworks, tied to public policies or laws.
• Security Safeguards: Data Fiduciaries must implement robust security measures such as:
  • Encryption, Access Control, and Monitoring to prevent unauthorized access.
  • Retention of Logs and Data for a minimum of one year, unless otherwise prescribed by law.
  • Contractual Safeguards to ensure third-party Data Processors comply with the data protection standards.
• Personal Data Breach Intimation: 
  • Immediate Notification: Data Fiduciaries must promptly notify affected Data Principals within 72 hours in the event of a data breach. The notification must include details about the breach and steps taken to mitigate any risks.
  • Board Reporting: Data Fiduciaries are also required to report breaches to the Data Protection Board.
• Erasure of Personal Data:
  • Data Fiduciaries must erase personal data if the purpose for its collection no longer holds. Data Principals must be notified at least 48 hours before this data erasure occurs, allowing them the chance to retain their data if necessary.
• Consent for Children’s and Disabled Individuals’ Data:
  • Data Fiduciaries must obtain verifiable consent from parents or legal guardians before processing the data of children. This could involve identity verification through Digital Locker or other government services.
• Government Powers:
• • The government may request data for specific purposes as outlined in the Seventh Schedule. Sensitive data disclosures related to national security or public order will require prior government approval.

Advantages of the Digital Personal Data Protection Rules 2025

• The Draft Digital Personal Data Protection Rules 2025 introduce several advantages for both individuals and organizations, ensuring a robust and secure data privacy ecosystem.
• Legal Certainty: The rules provide clear guidelines for businesses and individuals, reducing legal ambiguity and ensuring compliance with data protection norms. For instance, Amazon India collects personal data for various purposes, such as order processing, marketing, and improving user experience. To comply with the DPDP Act, Amazon must obtain explicit consent from users for each purpose, making sure the user understands what data is being collected and for what purpose.
• Global Competitiveness: Aligning with international data protection standards, such as the General Data Protection Regulation (GDPR) in Europe, makes India a competitive player in the global data economy. Indian businesses that comply with these standards will find it easier to collaborate with international companies. For example, tech companies in India that follow GDPR-like practices can attract clients in the European Union who require adherence to strict data protection norms. 
• Harmonized Approach: A consistent and predictable approach to data protection practices ensures stability across sectors. For instance, whether it’s in healthcare, e-commerce, or fintech, businesses will follow the same basic data protection procedures, making it easier to implement uniform practices across the economy.
• Technological Innovation: The rules encourage the development of privacy-enhancing technologies, such as differential privacy and secure multi-party computation. For instance, Apple has implemented differential privacy in various features across its products, including in the Safari browser and Apple Maps. 
• Business Benefits: Organizations stand to benefit by reducing risks associated with data breaches and enhancing their reputation as privacy-conscious businesses. A notable example is Microsoft, which has invested heavily in security protocols across its cloud services and applications. This proactive approach not only prevents financial losses but enhances customer trust. 
• User Empowerment: Empowering individuals with greater control over their personal data promotes a sense of agency and trust in digital platforms. For example, Facebook (now Meta) has made significant strides in implementing data access and deletion features, allowing users to see what data is being collected and enabling them to delete it if desired. These features contribute to a more positive user experience and higher engagement on platforms like Instagram and WhatsApp, where data is integral to the business model.
• Trustworthy Data Ecosystems: The framework ensures that data is used responsibly and ethically, benefiting societal innovation. For instance, healthcare organizations like NHS in the UK have been using anonymized data in research to develop new treatments and health policies. Similarly, Google Health collaborates with hospitals to utilize patient data for medical research, ensuring compliance with stringent privacy guidelines. These innovations foster collaboration across sectors while respecting user privacy and enabling breakthroughs in areas such as genomics and AI-driven diagnostics. 
• Improved International Relations: The rules help facilitate smoother international cooperation on data protection matters. Countries that have aligned data protection norms, like GDPR in the EU and the DPDP Act in India, can collaborate more easily on cross-border data-sharing initiatives. For example, India’s collaboration with the EU on research projects or joint initiatives in artificial intelligence benefits from the mutual understanding of stringent data protection measures. 
• Global Interoperability: The rules enable seamless cross-border data flow while ensuring that individuals’ data is adequately protected, which is crucial for businesses with global operations. Take global financial institutions like HSBC or Citibank as an example. These institutions handle vast amounts of personal data across various regions, including India, the EU, and the U.S. With the DPDP rules aligning more closely with GDPR, these institutions can now process cross-border transactions with greater ease, knowing they are in compliance with the laws in multiple jurisdictions. 
• Thriving Digital Economy: By creating a level playing field for businesses, the rules foster innovation and competition in a data-driven economy. For example, Paytm has leveraged data privacy as a key element of its business model in India’s digital payments market. The company has implemented stringent privacy and data security measures, which have contributed to its massive user base. The clear regulatory framework helps attract both investors and users who value security.

Challenges Associated with the Framework

• Emerging Technologies: With technologies like AI and IoT introducing new data protection concerns, such as algorithmic bias and lack of transparency, the framework must evolve to address these issues. For instance, in 2018, Amazon scrapped its AI-based recruitment tool after discovering that it was biased against women, as it was trained on resumes submitted to the company, which were predominantly from men. 
• Technological Limitations: There are challenges in implementing robust security systems to protect data from evolving cyber threats such as hacking, ransomware, and data breaches. For example, in 2020, WhatsApp experienced a data breach that exposed the personal data of more than 3 million users. Similarly, the Equifax breach of 2017 compromised the personal information of 147 million people, including sensitive data like social security numbers. 
• Social Impact: The digital divide could exacerbate inequalities, leaving marginalized communities without equal access to digital services and opportunities. For instance, India’s rural population makes up about 68% of its total population, yet internet penetration in rural areas lags far behind urban regions. According to TRAI (Telecom Regulatory Authority of India), urban areas had an internet penetration rate of 80%, while rural areas stood at around 30%. 
• Operational Challenges: Organizations face difficulties in implementing data protection regulations effectively, especially without adequate training and awareness programs. For example, in 2018, British Airways faced a data breach that compromised the personal details of 380,000 customers. An investigation revealed that the breach was caused by poor data security practices, including a lack of awareness among staff members regarding secure data handling.
• Transparency Issues: Lack of transparency in data processing makes it hard for individuals to understand how their data is being used. For example, Facebook’s Cambridge Analytica scandal in 2018 revealed that millions of users’ personal data was harvested without their explicit consent and used for political profiling.
• International Cooperation: Coordinating enforcement and compliance across international borders remains a complex challenge. A notable example is the EU-U.S. Privacy Shield, a framework designed to regulate transatlantic exchanges of personal data for commercial purposes. In 2020, the European Court of Justice struck down the Privacy Shield, ruling that it did not provide adequate protections for European citizens’ data when transferred to the U.S. The ruling exposed the challenges in aligning data protection laws across jurisdictions with differing privacy standards, such as the GDPR in the EU and DPDP in India. 
• Global Trends: Keeping pace with global data protection trends requires ongoing updates to the legal framework to remain relevant.  For instance, China implemented the Personal Information Protection Law (PIPL) in 2021, which closely mirrors the GDPR in many respects but also introduces unique provisions, such as mandatory data localization for critical data.
• Human Rights Considerations: Balancing privacy rights with freedoms such as freedom of speech and freedom of association is complex. For example, the Chinese government’s surveillance practices, which involve monitoring and controlling online speech, have raised concerns about how data protection laws can sometimes be used to suppress freedom of expression.
• Trust and Confidence: Sustaining public trust in the system and ensuring that individuals feel their data is secure will be an ongoing challenge. High-profile data breaches like the Yahoo hack (which compromised 3 billion accounts) and the Facebook-Cambridge Analytica scandal have significantly undermined user confidence in digital platforms. According to a Pew Research Center survey, about 79% of Americans say they are concerned about how companies use their personal information. As users become more aware of the risks to their privacy, trust in the system becomes harder to maintain.

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Way Forward 

• Awareness & Education: Ongoing educational initiatives should be implemented for businesses, individuals, and government bodies on their rights and responsibilities under the DPDP Act.
• Data Protection Impact Assessments (DPIAs): Organizations should proactively use DPIAs to assess the potential privacy risks of their data processing practices.
• Enforcement & Compliance: Stronger enforcement mechanisms and penalties for non-compliance are essential to ensure adherence to the DPDP Act.
• Quality Assurance: Regular audits and certifications can help ensure that organizations meet data protection standards.
• User-Centric Approach: Empowering individuals by giving them greater control over their personal data should remain a central priority.
• Adaptive Framework: The rules should remain flexible and evolve to address new challenges presented by emerging technologies.
• Technological Advancements: Harnessing new technologies like federated learning and differential privacy will be critical in improving data protection.
• Continuous Evaluation: A feedback mechanism to evaluate and refine the framework regularly will ensure its long-term effectiveness.