DPDP Act: Industry roots for a balance between data protection and innovation

After Union Minister Ashwini Vaishnaw announced that its final draft will be released for stakeholder and public consultation within a month, the impending Digital Personal Data Protection (DPDP) Act in India is poised to significantly reshape the landscape of digital advertising and data protection in the country.

The DPDP Act in India aims to safeguard individual privacy by regulating data collection, storage, and processing. This has significant implications for the digital advertising industry. When speaking to exchange4media, industry leaders expressed a mix of optimism and caution regarding its potential impact.

Ramya Parashar, Chief Operating Officer at MiQ, sees the act as a positive step towards establishing clear, uniform data protection standards across India. "This consistency is especially important for advertisers, who are facing an inconsistent map of laws and regulations right now," she notes.

Parashar believes the act could enhance transparency in data practices, fostering trust between businesses and consumers. She emphasizes the need for balance, stating, "We are hoping that the DPDP Act will have a synergy with the international data protection frameworks," which could facilitate smoother cross-border operations in the advertising sector.

However, Amit Verma, Founder of DigitUp, highlights potential challenges in implementation. He points out that many Indian businesses, particularly in the unorganized sector, may struggle with compliance, warning, “Effective implementation and enforcement of any law require adequate manpower and a well-structured organizational framework.”

He draws parallels with Europe's GDPR, noting the significant costs businesses faced there, but acknowledges that India's business landscape differs substantially.

The act mandates explicit consent for data processing, requires data minimization, and places restrictions on data transfers outside India. While these measures aim to protect user privacy, they could also present challenges for digital advertising companies in terms of data availability and compliance costs.

Experts believe that the act must strike a balance between protecting personal data and fostering innovation in areas like AI, machine learning, and personalized marketing. The legislation could provide clear legal guidance while giving companies room to develop new products and services within safe boundaries.

Verma sees the DPDP Act as an essential step but cautions about potential shortcomings. “Without strong regulatory oversight and enforcement mechanisms, there is a risk that businesses may not fully comply with the law,” he states. He also expresses concern about the limited powers granted to the newly formed Data Protection Board (DPB) and the significant discretionary powers given to the central government.

As of 2023, India's digital advertising industry was valued at over Rs 40,000 crore, and digital topped ad spends across mediums for the first time in the country. In 2024, the industry is projected to grow to over Rs  53,900 crore, with digital media expected to contribute nearly 16% of the total advertising market growth, and by 2025, the industry is expected to reach Rs 62,045 crore, with a compound annual growth rate (CAGR) of 23%

From an advertising industry perspective, Sajal Gupta, Chief Executive of Kiaos Marketing, emphasizes the need for balance. While recognizing the importance of data protection, Gupta suggests that the industry will likely seek ways to maintain effective marketing practices while respecting user privacy and complying with new regulations. However, he warns that in its current form, “the law will stifle the digital ad industry.”

However, offering a more optimistic view, Viren Vesuwala, Lead of PR & Corporate Communications at White Rivers Media, sees the DPDP Act as a significant shift towards ethical evolution in digital advertising. Vesuwala states, "The DPDP Act marks a significant shift in digital advertising. It establishes clear guidelines for data usage, prioritizing consumer trust through explicit consent requirements." He acknowledges challenges such as the absence of 'deemed consent' and clarity on international data transfers but views these as "speed bumps, not roadblocks."

Vesuwala also highlights the opportunity for startups, suggesting that while challenging, the new regulations offer a chance “to build trust from the ground up.” He concludes that the DPDP Act represents “a substantial step towards a more regulated and trustworthy digital advertising landscape.”

As India moves closer to implementing the DPDP Act, it's clear that while it presents challenges, particularly in terms of compliance and potential limitations on data usage, it also offers opportunities for creating a more transparent, trustworthy, and globally aligned digital ecosystem. The success of the act will likely depend on striking the right balance between protecting consumer privacy and allowing for innovation and growth in the digital advertising sector.