Data Protection Frameworks of India and the US: Data Sovereignty vs Market Flexibility
Summary
The key differences between India and the US as regards data protection frameworks relate to their approaches to consent mechanisms, cross-border data transfers, breach notifications and children’s data protection, with India taking a more centralised, stringent approach compared to the US’s distributed, flexible system.
The proliferation of digital technologies and the concomitant expansion of data-driven services have necessitated the development of robust personal data protection frameworks globally. As nations grapple with these challenges, two distinct approaches have emerged: India’s comprehensive, centralised framework represented by the Digital Personal Data Protection (DPDP) Rules 2025, and the United States’ sector-specific, market-driven approach. While India has chosen to implement a unified data protection framework with strong emphasis on data sovereignty, the United States continues to rely on a patchwork of sector-specific regulations and state laws, reflecting its preference for market flexibility over centralised control.
India’s Data Regulation Journey
India’s data regulation journey reached its much-anticipated destination with Draft Digital Personal Data Protection (DPDP) Rules released by the Ministry of Electronics and Information Technology (MeitY).[1] The DPDP Act 2003 has been built on years of recommendations along with judicial decisions that have shaped the contours of data protection. The journey of this legislative framework dates to 2011 with the Justice A.P. Shah Committee, which laid the foundation for privacy laws to protect data rights of individual. This momentum reached its new height with the landmark judgement of the Supreme Court in 2017, recognising the right to privacy as a fundamental right in the light of Justice K.S. Puttaswamy (Retd.) versus Union of India case.
In the following year, the government appointed a committee led by former Supreme Court Justice B.N. Srikrishna to draft the data protection bill. After extensive debate, the Joint Parliamentary Committee adopted the draft report on The Personal Data Protection Bill 2019. However, it was not well received by civil society stakeholders due to its restrictive structure. The government shelved it before it could be considered by the Parliament. MeitY worked on the recommendations and re-examined the issues that arrived at the first place and drafted the DPDP Bill in 2022.
The DPDP Rules 2025 contain 22 provisions along with seven schedules, and has touched upon key variables of data privacy. The most notable provisions are highlighted below.
Consent Management
One of the prominent aims of DPDP Rules has been to lay emphasis on informed consent. Data Fiduciaries, alike the data controllers under the European Union’s General Data Protection Regulation (GDPR), need to give a clear and standalone notice to Data Principals, that is, the individuals whose data is being processed. The notices should mention the type of data that is being collected, the purpose of data processing along with the process of withdrawing consent.
In addition, the rules have introduced the concept of Consent Manager,[2] which will be a registered entity entrusted to act as a point of Contact for Data Principals to manage their consent. This will allow individuals to have a secure and transparent platform to give, revise or withdraw their consent.[3]
Security Standards
Data Fiduciaries are required to implement appropriate and reasonable security measures to safeguard personal data. This includes access controls, monitoring for unauthorised access, regular data backups and encryption of data. Furthermore, the contract between Data Processors and Data Fiduciaries should ensure that measures to prevent data breaches are present in the first place. In case of breach, Data Fiduciaries are mandated to notify Data Principals at the earliest and furnish complete details about the nature and extent of breach, along with informing the Data Protection Board within 72 hours.[4]
Cross-Border Data Transfers
The DPDP rules have laid down clear guidelines for cross-border data transfer and seeks to reconcile national interests with the demands of global digital commerce. The regulations delineate explicit criteria for foreign data transfers, integrating measures to guarantee sufficient protection in recipient countries. The acknowledgment of conventional contractual provisions and binding corporate regulations reflects an understanding of established international norms, potentially enabling smooth commercial operations while upholding data protection requirements.
Children Data Processing
The framework’s strategy for safeguarding children’s personal data signifies a notable progress in digital privacy protection, employing multi-tiered safeguards that recognise the distinct vulnerabilities of kids inside the digital environment. The framework mandates stringent age verification criteria, obliging firms to adopt and sustain technical methods that accurately ascertain a user’s age prior to any data collection. Verification systems must be subjected to regular audits to verify ongoing effectiveness and thwart circumvention attempts, with firms mandated to maintain comprehensive documentation of their verification procedures.
The parental permission method constitutes an essential element of this protective framework, establishing a thorough system that transcends mere checkbox compliance. Organisations must employ advanced techniques to secure verified parental permission, including systems that validate guardian status authenticity. This consent framework functions on a temporal basis, necessitating regular renewal to maintain the relevance of data processing operations. Moreover, the system provides detailed consent alternatives, allowing parents to exert specific control over various facets of their children’s data processing activities.[5]
Data Retention Period
The data retention framework delineates explicit temporal restrictions for personal data keeping, incorporating both mandated timeframes and purpose-driven retention standards. Organisations must establish systematic data review processes to guarantee that personal information is retained just for the duration necessary to achieve the explicitly defined goals for which it was gathered. The framework requires companies to implement explicit retention schedules for several types of personal data, with distinct retention durations determined by the nature and sensitivity of the information. These schedules must include regulatory compliance obligations and genuine business necessities while emphasising data reduction. Organisations must do frequent audits of stored data to detect and eliminate information that has surpassed its retention period.
An important feature is the obligation for companies to have automated data deletion methods for information that has served its function. This encompasses stipulations for secure data disposal techniques and documentation mandates for deletion procedures. The framework also encompasses situations necessitating prolonged retention, such as legal requirements or historical research, while enforcing stringent restrictions on access and usage across these longer retention intervals.
The retention framework conforms to worldwide best practices by integrating measures for data archiving and anonymisation as substitutes for deletion. Organisations must provide a justification for selecting these alternatives instead of deletion and establish suitable technical protections to avert the re-identification of preserved or anonymised data.
Shortcomings
While the DPDP Rules 2025 tried to cover vast ground and address major challenges of data protection, there still are some misses against numerous hits.
The recurrent necessity for permission notifications has resulted in pervasive “consent fatigue”, causing users to indiscriminately accept conditions without genuine participation, so undermining the objective of informed consent. Digital settings pose distinct challenges in acquiring authentic consent, especially in mobile applications and IoT devices where conventional consent methods may be ineffective or inadequate.
The framework’s stipulations for vulnerable populations, such as the elderly, individuals with impairments, and those with restricted digital literacy, are deficient in comprehensive directives for guaranteeing informed consent. This disparity possibly renders these populations vulnerable to data exploitation. The existing procedures frequently neglect to consider diverse degrees of technical comprehension and accessibility requirements. The method for withdrawing consent is devoid of explicit procedural standards, presenting possible obstacles for users attempting to rescind previously granted consent. Organisations frequently implement intricate or ambiguous withdrawal procedures, and there is less guidance on managing data that has already been obtained upon the withdrawal of consent, especially in complicated data processing situations involving several stakeholders.
Data localisation mandates pose considerable operational difficulties for multinational corporations, particularly regarding data segregation and the maintenance of multiple data storage systems. This escalates compliance expenses due to the necessity for local servers, security infrastructures and specialised personnel. For start-ups and small enterprises, these financial burdens may be excessively high, potentially hindering innovation and market entry. The technical execution encounters obstacles in cloud computing environments where data inherently traverses borders. Organisations must establish intricate data tracking and routing mechanisms to ensure adherence to regulations. This adversely affects real-time data processing capabilities and service delivery efficiency. Furthermore, the requirements influence global data analytics capabilities, potentially constraining organisations’ capacity to utilise international data resources for innovation and service enhancement.
In addition, micro, small and medium enterprises (MSMEs) encounter substantial implementation challenges due to constrained financial and technical resources necessary for compliance. The technical intricacy entails the implementation of advanced data security measures, encryption systems and access controls necessitating specialist knowledge. Numerous compliance regulations lack comprehensive implementation guidance, resulting in ambiguity regarding acceptable compliance standards. This difficulty is exacerbated by a deficiency of qualified privacy specialists capable of guiding implementation processes, especially those who comprehend both technological requirements and legal compliance dimensions. The lack of experience results in increased expenses and possible compliance deficiencies, particularly for smaller firms with limited finances.
US Data Protection Framework
The United States does not possess a comprehensive federal data protection law comparable to the GDPR or India’s DPDPA. Rather, it depends on a combination of sector-specific regulations (e.g., HIPAA for health information, GLBA for financial information) and state legislation (e.g., California Consumer Privacy Act—CCPA).[6] This disjointed approach may result in discrepancies in data protection requirements among various jurisdictions.[7]
The consent methods of the two frameworks vary considerably. India’s DPDP Rules require explicit, informed consent for all data processing operations, along with stringent requirements for consent management and withdrawal protocols. Whereas, the US approach frequently permits implied consent and opt-out options, affording greater flexibility but potentially compromising the rigour of individual privacy protections. The Indian framework’s implementation of consent managers as registered entities signifies a unique approach absent in the US system.
The US lacks a cohesive strategy regarding cross-border data transfers. The invalidation of the EU–US Privacy Shield framework[8] in 2020 has resulted in significant uncertainty surrounding data transfers between the US and the EU. Organisations frequently depend on standard contractual clauses or alternative mechanisms to enable cross-border data transfers. However, these may not offer the same degree of protection as the DPDP Rules. India’s DPDP Rules enforce more stringent data localisation requirements, mandating that specific kinds of data be retained inside national borders. The US strategy emphasises data protection standards irrespective of geographical location, imposing less limitations on cross-border data flows. This distinction illustrates India’s prioritisation of data sovereignty in contrast to the US’s predominantly market-driven strategy.
Furthermore, in the matters of data breach, India’s DPDP Rules mandate a stringent 72-hour notification period for breaches, but US rules differ by state and sector, typically allowing for more flexible timelines.[9] The Indian framework expressly stresses technology standards and security measures more than its US counterpart, which often offers broader guidance on security criteria.
Children’s data protection also sees varying approaches. While both frameworks acknowledge the need for special protections, India’s DPDP Rules implement more stringent parental consent mechanisms and verification requirements compared to the US Children’s Online Privacy Protection Act (COPPA).[10] The Indian framework mandates regular renewal of parental consent and provides more detailed control options for parents over their children’s data processing activities.
Lastly, the structures of enforcement exhibit significant variation. India has created a centralised Data Protection Board that possesses extensive oversight authority, whereas the US depends on a range of regulatory agencies, state attorneys general and the Federal Trade Commission to carry out enforcement actions. The distinction between centralised and distributed approaches significantly influences organisational compliance with regulations and the management of violations, and often lead to inconsistent enforcement and varying levels of accountability for organisations.
Conclusion
The DPDP Rules 2025 represent a significant advancement in India’s data protection framework, drawing from historical precedents and responding to current challenges. Despite challenges in implementation, especially for SMEs and vulnerable populations, the framework establishes a basis for reconciling privacy rights with digital innovation. The success of this initiative depends on effective enforcement, collaboration among stakeholders and the ability to adapt to emerging technologies. The pursuit of effective data protection necessitates continuous improvement and dedication from all parties involved to guarantee that India’s digital future emphasises both advancement and privacy. The DPDP Rules could potentially act as a framework for other nations, such as the US, as they address the intricate challenges of data privacy in the digital era.
Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrikar IDSA or of the Government of India.
[1] “Draft Digital Personal Data Protection Rules 2025”, Ministry of Electronics & Information Technology, Government of India, 3 January 2025.
[2] Hannah Bainski, “India Releases New Draft Rules for Digital Personal Data Protection Act for Public Consultation”, McDonald Hopkins, 15 January 2025.
[3] Catherine E. O’Brien, “Key Highlights of India’s Draft Digital Personal Data Protection Rules, 2025”, Mondaq, 13 January 2025.
[4] Harsh Gour, “All You Wanted to Know About the Draft Digital Personal Data Protection Rules, 2025”, The Leaflet, 19 January 2025.
[5] “Explainer: Draft DPDP Rules 2025 Aim to Protect Citizens’ Data”, The Economic Times, 8 January 2025.
[6] Conor Murray, “U.S. Data Privacy Protection Laws: A Comprehensive Guide”, Forbes, 21 April 2023.
[7] F. Paul Pittman, “US Data Privacy Guide”, White & Case, 20 January 2025.
[8] “The EU-U.S. Data Privacy Framework: Background, Implementation, and Next Steps”, Congressional Research Service, 24 October 2022.
[9] “Understanding Data Protection and Privacy Laws in the United States”, Generis Global, 1 December 2024.
[10] Josh Fruhlinger, “COPPA Explained: How This Law Protects Children’s Privacy”, CSO, 8 February 2021.
