The Impact of India’s Data Protection Act

If you’re responsible for compliance in India, you know the data privacy landscape doesn’t stand still… and the latest draft rules for the Digital Personal Data Protection Act, released in April 2025¹, are proof. These new rules aren’t just another regulatory update; they signal a major shift for any business handling personal data in India.

The draft rules introduce phased implementation, clearer requirements for consent, and stricter controls on cross-border data transfers. For compliance leaders, understanding these changes — and what they mean for their operations — is now a strategic necessity, not just a legal requirement.

The rules  include key provisions around:

• Sensitive personal data (SPD): Includes health, financial, and biometric data. The DPDP Act mandates that SPD must be stored within India, though cross-border transfers are allowed under strict safeguards.
• Critical personal data (CPD): Pertains to data crucial for national security that must be stored and processed exclusively within India. No overseas transfer is permitted.
• Personal data: Can be transferred abroad only if the recipient country ensures a comparable level of data protection to India.

An Impact Felt Across Industries

Compliance and Operational Challenges

India’s data localisation laws have introduced a new layer of complexity for compliance teams. Organisations now face higher costs, technical hurdles, and stricter enforcement, all while trying to maintain smooth global operations a foundation of security and precision. Shufti gives operators both.


1. Increased costs and investment
Multinational and domestic organisations must invest in local data centres, leading to substantial financial outlays. This is particularly burdensome for global companies that must comply with Indian and international data protection regimes, resulting in fragmented and complex data management systems.

2. Technical and legal complexity
Complying with overlapping sectoral and national regulations requires robust data mapping, monitoring, and audit capabilities. Organisations must ensure that their data handling practices align with the evolving legal definitions of SPD and CPD, and be prepared for audits and enforcement actions.

3. Penalties for non-compliance
The DPDP Act introduces strict penalties for violations, with fines reaching up to INR 250 crore (approximately $30 million USD) for severe breaches.³ This underscores the need for a proactive compliance posture and real-time incident response capabilities.

4. Impact on global operations
Data localisation can hinder cross-border business operations, increasing costs and reducing operational flexibility. Studies suggest that broad localisation mandates could reduce India’s GDP by up to 0.8% and lower foreign direct investment by nearly 1.9%.⁴

Compliance as a Strategic Advantage

For compliance leaders, the evolving regulatory landscape represents an opportunity. Organisations that invest in robust data privacy, data security, and compliance solutions can differentiate themselves in a crowded market, build user trust, and reduce regulatory risk.

Shufti can help through a suite of compliance solutions designed to help organisations meet India’s Data Protection Act requirements. From real-time identity verification to advanced document and biometric authentication, Shufti’s tools support secure onboarding, data privacy, and regulatory compliance across sectors.

Staying Ahead

India’s data protection act and data localisation requirements reshape how organisations collect, store, and process data. The impact is especially pronounced in the finance, technology, healthcare, and telecom industries, which rely on sensitive and critical data. Compliance leaders must stay ahead of evolving regulations, invest in secure data management practices, and leverage trusted partners to safeguard their operations and reputation.

Ready to strengthen your compliance posture? Book a demo to see how Shufti can help you navigate India’s data protection landscape.