Authored By: Tanmay Sherekar
Vishwakarma University
Abstract
The enactment of the Digital Personal Data Protection Act, 2023 signifies a major regulatory shift in India’s approach to governing personal data in the digital economy. Corporate entities, which increasingly depend on personal data for commercial operations, are now subject to a statutory compliance framework that prioritises individual privacy and accountability. This article undertakes a doctrinal examination of the impact of the Act on corporate compliance in India. It analyses how the consent framework, obligations imposed on data fiduciaries, penalty provisions, and restrictions on cross-border data transfers reshape corporate governance practices. The article argues that the Act moves corporate compliance beyond formal adherence to legal requirements and encourages a culture of responsibility and transparency in business operations. While the compliance burden is significant, particularly for data-intensive businesses, the Act has the potential to strengthen trust in India’s digital marketplace.
Keywords
Digital Personal Data Protection Act, Corporate Compliance, Data Privacy, Data Fiduciaries, Corporate Governance, Regulatory Accountability
Introduction
The growth of digital commerce and online services has made personal data an essential resource for modern businesses. Corporations routinely process personal information to improve efficiency, expand consumer outreach, and enhance decision-making. However, for a long period, India lacked a comprehensive statutory framework regulating the collection and use of such data by private entities. This regulatory vacuum raised concerns regarding misuse, data breaches, and lack of accountability.
The legal position changed significantly after the Supreme Court recognised the right to privacy as a fundamental right under Article 21 of the Constitution.¹ This constitutional development created a strong foundation for legislative intervention. The Digital Personal Data Protection Act, 2023 (DPDPA) is a response to this need, providing a unified legal structure for regulating digital personal data.
For corporate entities, the Act introduces defined compliance obligations that affect internal processes, governance structures, and risk management strategies. This article examines how the DPDPA alters corporate compliance responsibilities in India and evaluates its broader implications for corporate governance.
Consent and Corporate Responsibility
Consent under the DPDPA forms the primary basis for lawful processing of personal data. Unlike earlier practices where consent was often implied or embedded in lengthy contractual terms, the Act requires consent to be informed, specific, and voluntary.² This change has a direct impact on how corporations design their data-collection systems.
From a compliance perspective, corporations must now ensure that individuals clearly understand why their data is being collected and how it will be used. Consent is no longer a one-time procedural step but an ongoing obligation. The ability of individuals to withdraw consent places an additional responsibility on corporate entities to maintain responsive systems capable of honouring such requests.³
This framework reflects a shift towards recognising personal data as an extension of individual autonomy rather than a commodity controlled exclusively by businesses. As a result, corporate compliance strategies must prioritise clarity, transparency, and user control.
Data Fiduciaries and the Expansion of Corporate Duties
The Act introduces the concept of the data fiduciary, which includes most corporate entities that determine the purpose and means of processing personal data.⁴ This classification brings with it a set of statutory responsibilities that significantly expand corporate duties in relation to data protection.
Corporate data fiduciaries are required to adopt reasonable safeguards to prevent unauthorised access, data breaches, and misuse. These obligations are not limited to technical measures but extend to organisational practices such as internal audits, employee awareness programs, and grievance redressal mechanisms.
Certain corporations may be designated as significant data fiduciaries based on factors such as scale of operations and nature of data processed.⁵ Such entities are subject to additional compliance requirements, including the appointment of data protection officers and periodic assessments of data-processing activities. These obligations integrate data protection into corporate governance frameworks and elevate compliance to a managerial responsibility.
Purpose Limitation and Data Minimisation
The principles of purpose limitation and data minimisation play a crucial role in shaping corporate compliance under the DPDPA. Businesses are permitted to collect personal data only for clearly defined and lawful purposes, and data collection must be restricted to what is necessary to achieve those purposes.⁶
This requirement compels corporations to reassess existing data-retention practices. The widespread practice of collecting excessive data for potential future use is no longer legally sustainable. Corporate entities must establish mechanisms for deleting personal data once the stated purpose has been fulfilled.
While these requirements may increase compliance costs in the short term, they encourage disciplined data management and reduce the risk of liability arising from unauthorised data retention or misuse.
Penalty Regime and Compliance Incentives
A significant aspect of the DPDPA is its penalty framework, which introduces substantial financial consequences for non-compliance.⁷ The prospect of penalties for data breaches or failure to implement security safeguards has altered how corporations perceive data protection obligations.
The establishment of the Data Protection Board of India provides an institutional mechanism for enforcement.⁸ This regulatory oversight encourages businesses to treat data protection as a core compliance function rather than a peripheral concern. The emphasis on accountability promotes proactive compliance strategies, including internal monitoring and risk assessment.
The penalty regime thus acts not only as a deterrent but also as an incentive for corporations to embed data protection into their operational and governance structures.
Cross-Border Data Transfers and Corporate Strategy
The Act also addresses cross-border transfer of personal data by allowing such transfers only to jurisdictions notified by the Central Government.⁹ This provision has important implications for multinational corporations and businesses engaged in global data processing.
Corporate entities must evaluate their data-transfer arrangements to ensure alignment with domestic regulatory requirements. Compliance strategies may involve contractual safeguards, localisation measures, or restructuring of data-processing operations. This regulatory approach seeks to balance economic integration with concerns relating to data sovereignty.
Corporate Governance and Ethical Compliance
Beyond technical compliance, the DPDPA influences corporate governance norms by emphasising transparency and accountability. Data protection obligations increasingly require oversight at the senior management and board level. This development aligns with broader governance trends that view privacy protection as a component of responsible business conduct.
Companies that integrate data protection into governance frameworks are better positioned to maintain consumer trust and regulatory confidence. In this sense, compliance with the Act contributes to long-term business sustainability rather than merely satisfying legal requirements.
Conclusion
The Digital Personal Data Protection Act, 2023 represents a decisive shift in India’s regulatory approach to corporate data practices. By imposing clear obligations relating to consent, accountability, and security, the Act reshapes corporate compliance in the digital economy. Although the compliance burden is considerable, particularly for data-driven businesses, the Act offers an opportunity to strengthen governance frameworks and promote ethical data practices.
From a doctrinal standpoint, the DPDPA redefines corporate compliance as a substantive responsibility grounded in constitutional values and regulatory accountability. Its effectiveness will depend on consistent enforcement and the willingness of corporations to adopt a culture of compliance that prioritises individual rights alongside commercial interests.
Footnotes
- Justice KS Puttaswamy v Union of India (2017) 10 SCC 1.
- Digital Personal Data Protection Act 2023 (India), s 6.
- Digital Personal Data Protection Act 2023 (India), s 6(4).
- Digital Personal Data Protection Act 2023 (India), s 2(i).
- Digital Personal Data Protection Act 2023 (India), s 10.
- Digital Personal Data Protection Act 2023 (India), ss 5–8.
- Digital Personal Data Protection Act 2023 (India), s 33.
- Digital Personal Data Protection Act 2023 (India), s 18.
- Digital Personal Data Protection Act 2023 (India), s 16.
- Ministry of Electronics and Information Technology, Government of India, ‘Digital Personal Data Protection Act, 2023’ https://www.meity.gov.in/content/digital-personal-data-protection-act-2023 accessed 2025.
- OECD, Guidelines on the Protection of Privacy and Transborder Flows of Personal Data (OECD Publishing 2013).
- European Union, General Data Protection Regulation (EU) 2016/679.
- Supreme Court of India, Internet and Mobile Association of India v Reserve Bank of India (2020) 10 SCC 274.
- NASSCOM, Data Protection and Privacy in India: Industry Perspectives (NASSCOM Report, 2023).
