US firms move Trump against RBI's financial data localisation rule

RBI, in a circular in April, had directed all system providers to ensure that the entire data relating to payment systems operated by them are stored in a system only in India. The regulator had given the companies time till 15 October to comply with the mandate.

But, American IT companies that provide financial services do not want to comply and want all Indian financial data in the United States. They also say that setting up servers for this would add to their operating costs in India, which would affect profitability.

Data localisation is an act of storing data on any device that is physically present within the borders of a particular country where the data was generated. While this is in vogue in most countries, these companies want an exception in India. 

These companies claim the backing of US commerce department. In fact, a US representative to the World trade Organisation (WTO) is reported to have said that setting up of local servers would impede a free flow of financial information from India.

"We want to have prohibitions on data localisation to ensure that there's free flow of information, free flow of data across borders, disciplines around countries requiring companies to give up their source code, permanent ban on taxation or duties on digital transmissions," Dennis Shea, deputy US trade representative and US Ambassador to the WTO, said in Washington on Friday.

"And by the way, South Africa and India want to rethink the current moratorium on those duties," Mr Shea said in response to a question at US think-tank, the Center for Strategic and International Studies (CSIS).

Shea did not specifically pointed out India on the data localisation issue, but made his views pretty clear where the Trump administration stands on this issue.

India, however, rejected their request of mirroring.

Republican Strategist Andy Surabian, who is also a political adviser to Donald Trump Jr, wrote in BreitBart News this week that the RBI move would put avoidable burden on US companies. He was also annoyed that Indian regulators are not catering to the demands of US companies despite all the financial support that US has been giving. 

"And they are planning to do all of this in spite of the unprecedented level of economic support the US has provided India over the course of decades. The Trump administration should stand up to these reckless actions, just like they have done in other situations when Americans were getting bullied and pushed around," Surabian demanded.

The Americans are planning to include the regulatory requirement in their trade negotiations that may begin early next year.

Mobile messaging platform WhatsApp, meanwhile, said it has built a system that stores payments-related data in India, in line with RBI's data localisation policy.