Understanding the Impact of the Digital Personal Data Protection Act, 2023 on Indian Businesses
The Digital Personal Data Protection Act, 2023, introduces stringent regulations to protect personal data in India. This article explores the implications for e-commerce, M&A, and real estate sectors, highlighting key provisions and compliance strategies.
Data ProtectionDpdp ActEcommerceMaReal EstateReal EstateJun 21, 2025
Real Estate:The Digital Personal Data Protection (DPDP) Act, enacted in India in 2023, marks a significant milestone in the country's data privacy framework. This legislation aims to protect the personal data of Indian citizens by imposing stringent requirements on how businesses handle and process this data. The DPDP Act shares similarities with the European Union’s General Data Protection Regulation (GDPR) and is expected to enhance data security, prevent cybercrimes, and improve customer engagement.
The DPDP Act is a modern, principles-based framework inspired by global standards like the GDPR. At its core, the DPDP Act governs three key stakeholders in the data ecosystem:
- Data Fiduciaries (those who determine the purpose and means of processing personal data),
- Data Processors (who process data on behalf of fiduciaries), and
- Data Principals (individuals to whom the personal data belongs).
One of the unique aspects of the DPDP Act is its risk-based approach to regulation. Instead of applying the same rules to all entities, it tailors obligations based on the nature and scale of data processing. Specifically, it introduces a category called Significant Data Fiduciaries — organizations that handle large volumes of personal data, especially sensitive data, or meet other thresholds prescribed by the government.
These entities have heightened responsibilities, which include:
- Appointing a Data Protection Officer (DPO) to ensure compliance and act as a point of contact for grievance redressal,
- Engaging an Independent Data Auditor to assess their data processing practices, and
- Conducting Data Protection Impact Assessments (DPIAs) to identify and mitigate privacy risks before launching new data-driven projects.
In contrast, the Act also provides for exemptions to promote ease of doing business, especially for smaller organizations and start-ups. These small-scale data fiduciaries may be relieved from some obligations, such as:
- Sending notices to data principals at the time of data collection,
- Ensuring the completeness and accuracy of personal data, and
- Honoring certain data rights like access to information or deletion of personal data.
However, these exemptions are not automatic — they are subject to government notification and may depend on the nature and context of the data processing.
The DPDP Act is not just comprehensive; it’s also dynamic. Its provisions cover a wide range of scenarios and can be complex to interpret in real-world situations. Even for companies with dedicated legal or privacy teams, ensuring compliance is not a one-time exercise — it requires continuous review, adaptation, and vigilance.
At its foundation, the DPDP Act is built on the principle of empowering individuals. It reflects a broader global recognition that people should have more say in how their personal data is used, especially in an increasingly digital world. To this end, the Act grants several important rights to data principals, including:
- The right to access their personal data,
- The right to correct or update inaccuracies,
- The right to erase their data under certain circumstances,
- The right to object to or restrict processing, and
- The right to data portability, allowing them to receive their data in a structured, machine-readable format and transfer it to another service provider.
Together, these rights aim to put individuals back in control of their digital lives. The DPDP Act is a step forward in creating a data governance framework that respects privacy while also supporting innovation and digital growth in India.
Key Provisions of the DPDP Act
- Data Minimization and Transparency
- Consent and Purpose Limitation
- Data Protection Officers (DPOs)
- Penalties for Non-Compliance
The Act marks a significant turning point in India’s data privacy regime, with far-reaching implications across sectors such as e-commerce, business operations including mergers and acquisitions (M&A), and real estate.
Impact on the E-Commerce Sector
India’s e-commerce industry has witnessed explosive growth, with over 345 million digital buyers in 2023 and projections exceeding 400 million by 2027. This rapid expansion has been propelled by personalized marketing, seamless transactions, and digital convenience. However, it has also raised significant concerns about data privacy and security, which the DPDP Act directly addresses.
The Act fundamentally reshapes how e-commerce companies collect, process, and manage personal data. One of its core legal principles is informed and explicit consent (Section 5 and 6), requiring companies to clearly disclose what data is collected, for what purpose, and with whom it may be shared. This eliminates ambiguous consent practices such as pre-ticked boxes, demanding active user approval. Moreover, users have the right to withdraw consent as easily as it was given, reinforcing individual autonomy over personal data.
The DPDP Act also enforces stringent data minimization and purpose limitation principles (Section 6). E-commerce firms can only collect data strictly necessary for their services, and retention of data must be limited to the duration required to fulfill the stated purpose. This compels companies to audit and potentially overhaul their data collection and storage systems to avoid unlawful or excessive data retention.
Children’s data receive special protection under Section 9, prohibiting behavioral tracking and targeted advertising without verifiable parental consent, reflecting a heightened sensitivity towards vulnerable users. Security obligations under Section 8 mandate e-commerce platforms to implement robust technical and organizational measures to safeguard data. In case of breaches, timely notification to the Data Protection Board and affected users is compulsory, ensuring transparency and accountability.
Non-compliance invites penalties up to Rs. 250 crores, underscoring the Act’s deterrent effect. Strategically, compliance offers e-commerce companies an opportunity to build consumer trust and brand loyalty by demonstrating respect for privacy, a critical competitive advantage in today’s digital economy.
Impact on Businesses and Mergers & Acquisitions (M&A)
The DPDP Act’s implications extend deeply into business operations, particularly in the context of mergers and acquisitions. Data is a critical asset in corporate transactions, and the Act’s rigorous data protection framework necessitates careful due diligence and compliance checks.
Businesses must ensure that personal data handled during M&A processes complies with the DPDP Act’s principles of lawful processing, consent, purpose limitation, and security. This means that any transfer of data between merging entities or to third-party vendors requires explicit consent or a lawful basis and must be transparently documented.
Data fiduciaries—companies controlling data—are accountable even when processing is outsourced, increasing operational complexity and compliance costs. Consequently, companies must implement comprehensive data governance frameworks, appoint Data Protection Officers (DPOs), and maintain records of processing activities to demonstrate accountability.
During M&A due diligence, data protection compliance has become a critical factor influencing deal valuation and negotiation. Failure to comply can expose companies to legal risks, including hefty fines and reputational damage, which can materially affect transaction outcomes.
Moreover, the DPDP Act introduces the concept of a Consent Manager registered with the Data Protection Board, enabling individuals to manage their consents across entities. This adds a layer of complexity for businesses involved in data transfers during M&A, requiring seamless integration of consent management systems.
Impact on the Real Estate Sector
The real estate industry in India is undergoing a digital transformation, with online property listings, digital transactions, and smart infrastructure becoming commonplace. The DPDP Act’s applicability to this sector is profound, given the vast amounts of personal data processed—from identity proofs and financial records to biometric data for access control.
The Act’s broad definition of “processing” encompasses all automated or partly automated operations on personal data, including collection, storage, sharing, and erasure. Real estate companies must therefore ensure compliance at every stage of the customer journey—from lead generation and booking to post-sale services.
Consent must be obtained explicitly and transparently, with companies required to provide clear privacy notices and store evidence of consent. The principle of data minimization obliges real estate firms to limit data collection to what is necessary for specific purposes, such as verifying buyer identity or facilitating loan processing.
The Act’s right to be forgotten (Section 12) empowers customers to request deletion of their data, compelling real estate companies to establish mechanisms for prompt erasure upon request.
The Real Estate Regulatory Authority’s (RERA) mandate for transparency aligns with the DPDP Act’s data protection goals, jointly enhancing accountability in real estate transactions.
However, compliance presents challenges, especially for smaller enterprises, due to the need for advanced data security infrastructure, dedicated compliance teams, and increased operational costs. Additionally, since data fiduciaries remain responsible for outsourced processing, real estate companies must ensure their vendors also adhere to the Act’s standards.
Conclusion
The Digital Personal Data Protection Act, 2023, heralds a new era of data privacy in India, compelling e-commerce platforms, businesses engaged in M&A, and real estate companies to fundamentally rethink their data handling practices. By embedding principles of consent, purpose limitation, data minimization, and security into their operations, these sectors not only comply with legal mandates but also build stronger relationships with customers and stakeholders.
While compliance entails challenges and costs, particularly for smaller players, the long-term benefits of enhanced trust, reduced legal risk, and improved brand reputation position companies to thrive in India’s evolving digital economy.
The DPDP Act is a modern, principles-based framework inspired by global standards like the GDPR. At its core, the DPDP Act governs three key stakeholders in the data ecosystem:
- Data Fiduciaries (those who determine the purpose and means of processing personal data),
- Data Processors (who process data on behalf of fiduciaries), and
- Data Principals (individuals to whom the personal data belongs).
One of the unique aspects of the DPDP Act is its risk-based approach to regulation. Instead of applying the same rules to all entities, it tailors obligations based on the nature and scale of data processing. Specifically, it introduces a category called Significant Data Fiduciaries — organizations that handle large volumes of personal data, especially sensitive data, or meet other thresholds prescribed by the government.
These entities have heightened responsibilities, which include:
- Appointing a Data Protection Officer (DPO) to ensure compliance and act as a point of contact for grievance redressal,
- Engaging an Independent Data Auditor to assess their data processing practices, and
- Conducting Data Protection Impact Assessments (DPIAs) to identify and mitigate privacy risks before launching new data-driven projects.
In contrast, the Act also provides for exemptions to promote ease of doing business, especially for smaller organizations and start-ups. These small-scale data fiduciaries may be relieved from some obligations, such as:
- Sending notices to data principals at the time of data collection,
- Ensuring the completeness and accuracy of personal data, and
- Honoring certain data rights like access to information or deletion of personal data.
However, these exemptions are not automatic — they are subject to government notification and may depend on the nature and context of the data processing.
The DPDP Act is not just comprehensive; it’s also dynamic. Its provisions cover a wide range of scenarios and can be complex to interpret in real-world situations. Even for companies with dedicated legal or privacy teams, ensuring compliance is not a one-time exercise — it requires continuous review, adaptation, and vigilance.
At its foundation, the DPDP Act is built on the principle of empowering individuals. It reflects a broader global recognition that people should have more say in how their personal data is used, especially in an increasingly digital world. To this end, the Act grants several important rights to data principals, including:
- The right to access their personal data,
- The right to correct or update inaccuracies,
- The right to erase their data under certain circumstances,
- The right to object to or restrict processing, and
- The right to data portability, allowing them to receive their data in a structured, machine-readable format and transfer it to another service provider.
Together, these rights aim to put individuals back in control of their digital lives. The DPDP Act is a step forward in creating a data governance framework that respects privacy while also supporting innovation and digital growth in India.
Key Provisions of the DPDP Act
- Data Minimization and Transparency
- Consent and Purpose Limitation
- Data Protection Officers (DPOs)
- Penalties for Non-Compliance
The Act marks a significant turning point in India’s data privacy regime, with far-reaching implications across sectors such as e-commerce, business operations including mergers and acquisitions (M&A), and real estate.
Impact on the E-Commerce Sector
India’s e-commerce industry has witnessed explosive growth, with over 345 million digital buyers in 2023 and projections exceeding 400 million by 2027. This rapid expansion has been propelled by personalized marketing, seamless transactions, and digital convenience. However, it has also raised significant concerns about data privacy and security, which the DPDP Act directly addresses.
The Act fundamentally reshapes how e-commerce companies collect, process, and manage personal data. One of its core legal principles is informed and explicit consent (Section 5 and 6), requiring companies to clearly disclose what data is collected, for what purpose, and with whom it may be shared. This eliminates ambiguous consent practices such as pre-ticked boxes, demanding active user approval. Moreover, users have the right to withdraw consent as easily as it was given, reinforcing individual autonomy over personal data.
The DPDP Act also enforces stringent data minimization and purpose limitation principles (Section 6). E-commerce firms can only collect data strictly necessary for their services, and retention of data must be limited to the duration required to fulfill the stated purpose. This compels companies to audit and potentially overhaul their data collection and storage systems to avoid unlawful or excessive data retention.
Children’s data receive special protection under Section 9, prohibiting behavioral tracking and targeted advertising without verifiable parental consent, reflecting a heightened sensitivity towards vulnerable users. Security obligations under Section 8 mandate e-commerce platforms to implement robust technical and organizational measures to safeguard data. In case of breaches, timely notification to the Data Protection Board and affected users is compulsory, ensuring transparency and accountability.
Non-compliance invites penalties up to Rs. 250 crores, underscoring the Act’s deterrent effect. Strategically, compliance offers e-commerce companies an opportunity to build consumer trust and brand loyalty by demonstrating respect for privacy, a critical competitive advantage in today’s digital economy.
Impact on Businesses and Mergers & Acquisitions (M&A)
The DPDP Act’s implications extend deeply into business operations, particularly in the context of mergers and acquisitions. Data is a critical asset in corporate transactions, and the Act’s rigorous data protection framework necessitates careful due diligence and compliance checks.
Businesses must ensure that personal data handled during M&A processes complies with the DPDP Act’s principles of lawful processing, consent, purpose limitation, and security. This means that any transfer of data between merging entities or to third-party vendors requires explicit consent or a lawful basis and must be transparently documented.
Data fiduciaries—companies controlling data—are accountable even when processing is outsourced, increasing operational complexity and compliance costs. Consequently, companies must implement comprehensive data governance frameworks, appoint Data Protection Officers (DPOs), and maintain records of processing activities to demonstrate accountability.
During M&A due diligence, data protection compliance has become a critical factor influencing deal valuation and negotiation. Failure to comply can expose companies to legal risks, including hefty fines and reputational damage, which can materially affect transaction outcomes.
Moreover, the DPDP Act introduces the concept of a Consent Manager registered with the Data Protection Board, enabling individuals to manage their consents across entities. This adds a layer of complexity for businesses involved in data transfers during M&A, requiring seamless integration of consent management systems.
Impact on the Real Estate Sector
The real estate industry in India is undergoing a digital transformation, with online property listings, digital transactions, and smart infrastructure becoming commonplace. The DPDP Act’s applicability to this sector is profound, given the vast amounts of personal data processed—from identity proofs and financial records to biometric data for access control.
The Act’s broad definition of “processing” encompasses all automated or partly automated operations on personal data, including collection, storage, sharing, and erasure. Real estate companies must therefore ensure compliance at every stage of the customer journey—from lead generation and booking to post-sale services.
Consent must be obtained explicitly and transparently, with companies required to provide clear privacy notices and store evidence of consent. The principle of data minimization obliges real estate firms to limit data collection to what is necessary for specific purposes, such as verifying buyer identity or facilitating loan processing.
The Act’s right to be forgotten (Section 12) empowers customers to request deletion of their data, compelling real estate companies to establish mechanisms for prompt erasure upon request.
The Real Estate Regulatory Authority’s (RERA) mandate for transparency aligns with the DPDP Act’s data protection goals, jointly enhancing accountability in real estate transactions.
However, compliance presents challenges, especially for smaller enterprises, due to the need for advanced data security infrastructure, dedicated compliance teams, and increased operational costs. Additionally, since data fiduciaries remain responsible for outsourced processing, real estate companies must ensure their vendors also adhere to the Act’s standards.
Conclusion
The Digital Personal Data Protection Act, 2023, heralds a new era of data privacy in India, compelling e-commerce platforms, businesses engaged in M&A, and real estate companies to fundamentally rethink their data handling practices. By embedding principles of consent, purpose limitation, data minimization, and security into their operations, these sectors not only comply with legal mandates but also build stronger relationships with customers and stakeholders.
While compliance entails challenges and costs, particularly for smaller players, the long-term benefits of enhanced trust, reduced legal risk, and improved brand reputation position companies to thrive in India’s evolving digital economy.
Frequently Asked Questions
What is the Digital Personal Data Protection Act (DPDP) 2023?
The DPDP Act 2023 is a comprehensive data protection law in India designed to protect the personal data of Indian citizens. It imposes stringent requirements on how businesses handle and process personal data, aiming to enhance data security and prevent cybercrimes.
Who are the key stakeholders under the DPDP Act?
The key stakeholders under the DPDP Act are Data Fiduciaries (those who determine the purpose and means of processing personal data), Data Processors (who process data on behalf of fiduciaries), and Data Principals (individuals to whom the personal data belongs).
What are the responsibilities of Significant Data Fiduciaries?
Significant Data Fiduciaries have heightened responsibilities, including appointing a Data Protection Officer (DPO), engaging an Independent Data Auditor, and conducting Data Protection Impact Assessments (DPIAs) to identify and mitigate privacy risks.
How does the DPDP Act impact the e-commerce sector?
The DPDP Act reshapes how e-commerce companies collect, process, and manage personal data. It requires informed and explicit consent, data minimization, and purpose limitation, and imposes penalties for non-compliance.
What are the implications of the DPDP Act for mergers and acquisitions (M&A)?
The DPDP Act necessitates careful due diligence and compliance checks in M&A processes. Companies must ensure that personal data is handled lawfully, with explicit consent, and must maintain records of processing activities to demonstrate accountability.
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