Cross-Border Data Transfers for Startups

DPDPA takes a blacklist approach to cross-border transfers. Section 16(1) provides that personal data may be transferred outside India except to countries restricted by government notification. This differs from frameworks like GDPR that require positive authorization for transfers. Under DPDPA, transfers are permitted unless specifically prohibited. The government is empowered to notify restricted countries based on factors including the country's data protection standards and any conditions affecting data security. Startups must monitor these notifications and structure operations accordingly.

Most startups rely on cloud infrastructure provided by international companies like AWS, Google Cloud, and Microsoft Azure. These providers typically offer data residency options allowing customers to specify where data is stored. When selecting cloud infrastructure, consider where data will physically reside, what jurisdictions may have access under provider arrangements, whether the provider offers appropriate data processing terms, and how jurisdictional changes would affect operations. Configuring data residency appropriately and maintaining visibility into where data flows is essential for compliance.

Startups serving international customers often need to transfer data to those customers' jurisdictions. Understanding the transfer framework enables appropriate structuring of these relationships. Data collected in India from Indian Data Principals is subject to DPDPA regardless of where it is subsequently processed. Transfers to international customers must comply with transfer restrictions. Customer agreements should address data protection obligations and transfer mechanisms. Consider whether data can be processed locally rather than transferred.

Startups with operations in multiple countries face complex data flow considerations. Intra-group transfers between entities must comply with transfer restrictions. Employee data may flow between jurisdictions for HR purposes. Customer support operations may access data from different locations. Understanding and mapping these flows enables compliant structuring. Consider whether certain processing can be localized to avoid cross-border complications. Document the business necessity for transfers that do occur.

International vendors may process data in various jurisdictions. Vendor selection should consider where vendors and their subprocessors store and access data. Evaluate whether vendor locations are or may become restricted jurisdictions. Ensure vendor agreements provide visibility into processing locations and include notification requirements for changes. Preference vendors offering flexible data residency options. Consider compliance implications as part of the vendor selection criteria rather than an afterthought.

The cross-border transfer framework under DPDPA will evolve through government notifications. Startups should build flexibility into their operations to adapt to changes. Maintain current awareness of notification status. Structure infrastructure to allow jurisdictional adjustment if needed. Develop contingency plans for scenarios where currently permitted jurisdictions become restricted. Regulatory monitoring should be an ongoing compliance activity rather than a one-time assessment.