How Will India’s New Data Protection Law Affect Everyday Businesses and Apps?

Table of Contents

• Understanding the DPDPA 2023
• Who Does the DPDPA Affect?
• Key Requirements for Businesses and Apps
• Challenges for Everyday Businesses
• Opportunities for Growth and Trust
• Practical Steps to Comply
• Conclusion
• Frequently Asked Questions (FAQs)

Understanding the DPDPA 2023

The Digital Personal Data Protection Act (DPDPA) 2023 is India’s first comprehensive law to protect personal data—think names, phone numbers, addresses, or even your shopping history. Passed in August 2023 and fully implemented by mid-2025, it replaces older rules under the Information Technology Act, 2000. The DPDPA aims to balance user privacy with business innovation, a tough act in a country where 70% of internet access happens via mobile apps.

Core Principles of DPDPA:

• User Consent: Businesses must get clear permission before collecting or using personal data.
• Data Minimization: Collect only what’s necessary for the service—like a delivery app needing your address but not your Aadhaar number.
• Purpose Limitation: Use data only for the stated purpose, not for unrelated marketing.
• Transparency: Inform users how their data is handled, stored, or shared.
• Security: Protect data with encryption and report breaches within 72 hours.

Violations carry steep penalties up to ₹250 crore or 4% of global turnover—making compliance non-negotiable. For businesses and apps, this law is a wake-up call to rethink data practices.

Who Does the DPDPA Affect?

The DPDPA applies to any entity processing personal data in India, from global giants like Google to your local kirana store using a payment app. It covers:

• Small Businesses: Shops, restaurants, or freelancers collecting customer info, like phone numbers for loyalty programs.
• Startups and Apps: E-commerce, food delivery, or fitness apps handling user data like location or payment details.
• Large Corporations: Banks, telecoms, or tech firms managing vast datasets.
• Foreign Companies: Any business offering services in India, even if based abroad, must comply.

Exemptions exist for personal use (like your family WhatsApp group) or certain government functions, but most commercial entities are under the DPDPA’s radar. In 2025, an estimated 1.2 million businesses, including 90% of India’s 63 million MSMEs, will need to adjust their practices.

Key Requirements for Businesses and Apps

The DPDPA sets a high bar for data handling. Here’s what businesses and apps must do:

Data Protection Officer (DPO): Larger firms, or “Significant Data Fiduciaries” (SDFs), must appoint a DPO to oversee compliance. Think of it as a data watchdog ensuring rules are followed.

Consent Mechanisms: Apps must show clear, easy-to-understand consent pop-ups. For example, a fitness app must explain why it needs your health data and let you opt out.

Data Breach Reporting: If a hacker accesses your customer database, you must notify the Data Protection Board of India (DPBI) within 72 hours.

User Rights: Customers can access, correct, or delete their data. A shopping app must let users see their order history or erase their account.

Security Measures: Use encryption and regular audits to protect data. A small café using UPI must secure payment details to avoid leaks.

These requirements mean rethinking how data flows, from collection to storage, impacting operations big and small.

Challenges for Everyday Businesses

Complying with DPDPA isn’t a walk in the park, especially for smaller players. Here’s a table summarizing key challenges and their impacts:

These hurdles hit small businesses hardest, but even big players face headaches in aligning systems and training staff.

Opportunities for Growth and Trust

It’s not all doom and gloom. The DPDPA opens doors for businesses to shine:

Building User Trust: Transparent data practices make customers feel safe. A 2025 survey showed 65% of Indian users prefer apps with clear privacy policies, boosting retention.

Competitive Edge: Small businesses that comply early stand out. A Delhi-based e-commerce startup saw 30% more sales after advertising DPDPA compliance.

Innovation in Security: The law pushes firms to adopt cutting-edge tools like AI for breach detection, spurring tech growth. India’s cybersecurity market is projected to hit $10 billion by 2028.

Global Market Access: Compliance aligns Indian apps with international standards, easing entry into markets like the EU.

Customer Loyalty: Offering data deletion or correction builds loyalty. Zomato’s 2025 “Data Control” feature increased user trust by 40%.

By embracing DPDPA, businesses can turn compliance into a brand strength, not a burden.

Practical Steps to Comply

Ready to get DPDPA-ready? Here’s how businesses and apps can stay compliant without breaking the bank:

• Update Privacy Policies: Clearly explain what data you collect and why. A grocery app should state it uses addresses only for deliveries.
• Simplify Consent: Use plain language in pop-ups, like “We need your location to deliver food. Okay?”
• Secure Data: Use affordable encryption tools; cloud providers like AWS offer DPDPA-compliant solutions for ₹10,000/month.
• Train Staff: Educate employees on data handling. A small retailer can run free webinars from MeitY.
• Audit Vendors: Ensure third-party services, like payment gateways, comply with DPDPA.
• Prepare for Breaches: Have a plan to notify DPBI within 72 hours, including a hotline for customers.
• Leverage Tools: Use AI-driven compliance software, like those from Indian startups, to automate audits for ₹50,000/year.

These steps, tailored for small and large players, make compliance manageable and cost-effective.

Conclusion

India’s DPDPA 2023 is a seismic shift for businesses and apps, from roadside vendors to tech unicorns. It demands a rethink of data practices, with challenges like high costs and technical hurdles, especially for small firms. Yet, it’s also a chance to build trust, gain a competitive edge, and tap global markets. By prioritizing user consent, security, and transparency, businesses can turn compliance into opportunity. The road isn’t easy—fines loom large, and user expectations are rising—but with practical steps like clear policies and affordable tools, India’s digital ecosystem can thrive securely. As the law reshapes how 800 million users interact with apps, businesses that adapt will lead the charge in a privacy-first future.

Frequently Asked Questions (FAQs)

What is the DPDPA 2023?

India’s Digital Personal Data Protection Act, enforced in 2025, regulates how businesses collect, use, and protect personal data.

Who does the DPDPA apply to?

Any business or app in India handling personal data, from small shops to global tech firms.

What is personal data under DPDPA?

Any info identifying a person, like names, phone numbers, addresses, or app usage patterns.

What are the penalties for non-compliance?

Fines up to ₹250 crore or 4% of global turnover, depending on the violation.

Do small businesses need a Data Protection Officer?

Only “Significant Data Fiduciaries” like large apps do; small firms may not, but must still comply.

How does DPDPA affect apps?

Apps must get user consent, secure data, and allow users to access or delete their info.

What is data minimization?

Collecting only the data needed for a specific purpose, like a delivery app needing just your address.

Can users delete their data?

Yes, DPDPA gives users the right to erase their data from apps or businesses.

How do businesses report data breaches?

Notify the Data Protection Board of India within 72 hours, detailing the breach and response.

Does DPDPA apply to foreign companies?

Yes, if they offer services in India, they must follow DPDPA rules.

How costly is DPDPA compliance?

Small businesses may spend ₹5 lakh yearly; larger firms face higher costs for DPOs and systems.

Can consent pop-ups hurt user experience?

Yes, complex pop-ups may reduce engagement by 20%, so keep them simple.

What security measures are required?

Encryption, regular audits, and secure storage to protect user data from hacks.

How does DPDPA boost user trust?

Clear privacy policies and user rights make 65% of users prefer compliant apps.

Are there exemptions under DPDPA?

Yes, for personal use or certain government functions, but most businesses are covered.

What is the Data Protection Board of India?

A body overseeing DPDPA compliance, handling complaints, and imposing fines.

Can small businesses afford compliance?

Yes, with affordable tools like cloud encryption and free MeitY training.

How does DPDPA align with global laws?

It mirrors GDPR’s focus on consent and security, helping Indian apps go global.

What happens if an app ignores DPDPA?

It risks fines, legal action, and loss of user trust, harming business growth.

What’s the future for businesses under DPDPA?

More trust, innovation in security, and a stronger digital economy if they adapt well.