Decoding India’s DPDP rules: What businesses need to know and do

India's digital economy is undergoing a transformative shift, driven by the increasing volume of digital data and a heightened awareness of individual privacy rights. The landmark Supreme Court ruling in 2017, which recognized privacy as a fundamental right, set the stage for a new era of data protection. This culminated in the Digital Personal Data Protection Act (DPDPA) of 2023, followed by the draft Digital Personal Data Protection Rules issued in January 2025, offering crucial operational guidance, notes Atul Gupta, Partner and Head of Digital Trust and Cyber Security Services, KPMG in India.

Beyond mere compliance, data privacy has emerged as a strategic cornerstone for global businesses. It's about building and maintaining trust, safeguarding reputation, and fostering innovation in an increasingly data-driven world, particularly with the rapid adoption of technologies like Artificial Intelligence (AI). The DPDPA, much like its global counterparts, carries significant weight, with non-compliance potentially leading to substantial fines, reportedly up to INR 250 crores, alongside severe reputational damage, according to Gupta.

Unpacking the DPDP Draft Rules: Key Areas of Focus

The recently published draft rules are designed to strengthen India's data protection framework. While their effectiveness hinges on the swift establishment and operation of the Data Protection Board, they offer clarity in several critical areas:

Personal Data Breach Notification: The rules provide detailed guidelines for informing authorities and data principals about breaches, including specific timelines and required information. A layered approach is emphasized, with immediate notification followed by a comprehensive report within 72 hours.

Consent Management: A core tenet of the rules is active consent management. This includes detailed provisions on language for privacy notices, content requirements, and communication channels. Mechanisms for consent withdrawal and the establishment of a consent management entity are also highlighted. Special attention is given to obtaining consent for children and individuals with disabilities.

Security Safeguards: Organizations are mandated to implement robust data security and protection measures. This extends beyond internal operations to encompass third-party vendors and supply chains, underscoring the interconnected nature of data security.

Empowering the Data Principal: The rules are designed to empower individuals by establishing clear mechanisms for grievance redressal, data updates, data removal, and the appointment of nominees.

Data Retention: The rules specify data retention periods based on the nature of services and intermediaries, along with provisions for exception management.

Strategic Imperatives for Organizations: Beyond Compliance

The DPDPA signifies a fundamental shift in India's approach to managing digital data privacy. For organizations, this presents a unique opportunity to cultivate an environment of trust with their stakeholders – customers, regulators, and investors – ultimately driving value and fostering innovation.

It's crucial for businesses to view the DPDPA not just as a compliance checklist, but as a holistic strategic imperative. This requires seamless collaboration across the C-suite:

Marketing must balance personalization with the principles of active consent.

Procurement needs to ensure that third-party engagements adequately address data privacy requirements.

Research & Development and Engineering teams must be sensitive to the ethical use of personal information.

Customer Service departments need to establish effective grievance mechanisms.

Technology teams are responsible for laying the foundation for robust data security.

Legal functions must ensure compliance while fostering an environment that encourages innovation.

This moment presents an opportunity for organizations to gain a strategic advantage. Ethical data stewardship can cultivate customer loyalty, enhance brand reputation, and build trust in an era where customer experience is paramount to success.

Cultivating a Privacy-Centric Culture: The Path Forward

Fostering a privacy-centric culture under the DPDP Act begins with strong leadership commitment. The C-suite must champion a "privacy-first" mindset, placing trust and transparency at the core of their operations. This involves embedding accountability into governance frameworks and allocating sufficient resources.

While the DPDP rules establish a foundation for compliance, they represent merely the starting point for effective data privacy practices. The regulation offers far more than a simple mandate; it's a powerful lever to elevate trust, accountability, and innovation within the digital economy. By strategically aligning data privacy and protection with broader business objectives, organizations can forge a future where trust and progress are inextricably linked, demonstrating that regulatory frameworks can indeed drive both ethical responsibility and commercial success.

Ultimately, enterprises should seize this opportunity to cultivate "Digital Trust" across their entire ecosystem, encompassing customers, employees, regulators, and third-party partners.

Read More:DPDP Act: Making sense of the rules for marketers