Exemptions Denied: The Impact of the New Privacy Law on Startups

Due to the new DPDP Act (Digital Personal and Data Privacy Act), the startup ecosystem and its legal counsel are in a dilemma. This is because of the lack of clarity on how much time will be allotted for its implementation. The startup ecosystem is prepared with its arguments since it wants at least two years to implement the new DPDP Act. 

Smaller businesses and startups will need to redesign their backend and frontend in order to comply with the new Act.

The industry is unaware of the implementation process and specifics of the Act until the guidelines are set. The more time the industry has to adapt to the new Act and switch to a new format, the longer the government takes to design the rules. Numerous companies stated that they did not even anticipate the DPDP Bill to be approved by the Parliament in its current form. 

The industry also anticipates the development of regulations which will specify how the privacy law will be applied. The government has not yet published these regulations. HJA & Associates LLP managing partner Jitendra Ahlawat explains: “The fundamental geography is the subject of the entire Act. The Act frequently refers to rules that will be written later. The rules will contain specific information about how the Act will be applied.”

The Impact of New Privacy Law on Startups 

Startups are currently analysing their fundamental IT infrastructure to determine when consumer data is acquired and how many employees can access it. Startups must concentrate on the new law’s provisions when data mapping is finished and incorporate its guiding principles into their backend and frontend. The impact of the new privacy law on startups can be in terms of: 

  • Financial Restrictions: Startups, particularly those that are just getting started, sometimes deal with tight budgets. New privacy rules can be expensive to comply with, taking money away from product growth and development.
  • Competitive Disadvantage: Startups are at a disadvantage since more prominent companies with more resources can more readily bear compliance costs.
  • Adapting Business Models: New businesses frequently change and refine their business models. These models might be disturbed by adapting to changing privacy rules, which would necessitate expensive changes and delays.

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