DPDP Act: Top Business Takeaways for 2025

The Digital Personal Data Protection (DPDP) Act marks a significant shift in how organizations handle personal data in India. With data becoming the new currency in the digital world, this legislation empowers individuals with more control over their personal data and imposes new compliance responsibilities on businesses and data fiduciaries.

This blog breaks down the DPDP Act into digestible insights, highlighting key obligations, rights, penalties, and implications for enterprises operating in the Indian digital space.

Table of Contents

1. What is the DPDP Act?
2. Scope and Applicability
3. Key Definitions
4. Core Principles of the Act
5. Rights of Data Principals
6. Obligations of Data Fiduciaries
7. Cross-Border Data Transfer Rules
8. Consent Management Framework
9. Role of the Data Protection Board
10. Penalties and Non-Compliance
11. Impact on Startups, SMEs, and Enterprises
12. How to Prepare for DPDP Compliance
13. FAQs

What is the DPDP Act?

1. The Digital Personal Data Protection (DPDP) Act, 2023 is India’s landmark legislation regulating how personal data is collected, processed, stored, and transferred.
2. The law aims to protect individuals’ rights while enabling innovation and ease of doing business in the digital economy. It complements other frameworks like AI-powered identity verification that ensure personal data is validated securely.
3. The Act was notified in August 2023 and is expected to come into effect in phases during 2024–2025.

Scope and Applicability

1. Applies to all entities (government or private) that process digital personal data in India.
2. Covers both Indian and foreign organizations if the data being processed pertains to individuals within India.
3. Includes data collected online and data collected offline but digitized later - especially relevant in digital eKYC customer verification processes.

Key Definitions

1. Data Principal: The individual whose data is being processed.
2. Data Fiduciary: The entity that determines the purpose and means of data processing.
3. Consent Manager: An independent body registered with the Data Protection Board to manage user consent, crucial in easy identity verification frameworks.
4. Significant Data Fiduciary (SDF): Fiduciaries dealing with large-scale data processing, subject to additional obligations.

Core Principles of the Act

1. Lawful Processing: Data must be collected with consent or legitimate use grounds. For example, KYC operations rely on lawful and structured data intake methods.
2. Purpose Limitation: Data should only be used for the specific purpose it was collected.
3. Data Minimization: Only necessary data should be collected, a principle often implemented through AI OCR verification tools that extract only relevant fields.
4. Storage Limitation: Data must not be retained beyond necessary duration.
5. Accountability: Fiduciaries must implement security safeguards and redress mechanisms, particularly important in fraud detection during financial transactions.

Rights of Data Principals

1. Right to Access: Individuals can request access to their personal data.
2. Right to Correction and Erasure: Inaccurate or outdated data can be corrected or deleted.
3. Right to Consent Withdrawal: Consent can be withdrawn at any time.
4. Right to Grievance Redressal: Principals can file complaints against misuse.
5. Right to Nominate: Nomination rights allow data principals to appoint someone in the event of incapacity or death, adding a layer of safety that is also seen in KYC/KYB verification for businesses.

Obligations of Data Fiduciaries

1. Obtain clear, informed, and specific consent before processing data.
2. Implement technical and organizational measures for data protection.
3. Ensure transparency in data usage and provide accessible privacy notices.
4. Notify data breaches promptly to the Data Protection Board and affected individuals.
5. Comply with additional obligations if classified as a Significant Data Fiduciary (e.g., risk assessments, audits, appointing a DPO) - a concept echoed in enterprise-level compliance tools like SprintVerify's advanced KYC modules.

Cross-Border Data Transfer Rules

1. The Act permits cross-border transfers unless restricted by the government through official notification.
2. Government may create a negative list of countries where data cannot be transferred.
3. No data localization requirement as in previous drafts, making international integrations easier for tools like Candy, which streamline onboarding across geographies.

Consent Management Framework

1. Consent must be free, informed, specific, unambiguous, and given through a clear affirmative action.
2. Use of Consent Managers to help individuals manage and track their consents, similar to mechanisms integrated within easy digital identity workflows.
3. Consent requests should be in plain language, with options for withdrawal.

Role of the Data Protection Board

1. The Data Protection Board of India will be the adjudicatory body for privacy-related disputes.
2. Functions include investigations, grievance redressal, issuing penalties, and guiding compliance.
3. It operates independently but is appointed by the Central Government, raising concerns over autonomy.

Penalties and Non-Compliance

1. Non-compliance can attract fines up to INR 250 crore (~$30 million) per violation.
2. Some examples of penalties include:
• INR 200 crore for failing to prevent data breaches.
• INR 150 crore for violating children's data provisions.
• INR 50 crore for failing to honor data principal rights.
3. Repeated violations may lead to increased scrutiny or operational restrictions. Strong compliance tools such as AI OCR and identity verification systems help businesses stay on the right side of the law.

Impact on Startups, SMEs, and Enterprises

1. Startups and MSMEs may face challenges due to compliance costs.
2. Enterprises and MNCs must overhaul their data processing practices and rework contracts, especially for cross-border operations.
3. High-risk sectors like fintech, healthtech, and edtech are most affected, particularly where identity fraud detection is mission-critical.

How to Prepare for DPDP Compliance

1. Data Audit: Identify all personal data touchpoints within your systems.
2. Policy Update: Update privacy policies and terms of service to reflect DPDP provisions.
3. Consent Infrastructure: Implement or integrate with consent management tools.
4. Training: Conduct awareness sessions for employees and data handlers.
5. Vendor Assessment: Evaluate third-party processors for compliance readiness.
6. Incident Response: Establish clear processes for breach detection and notification - and use tools like SprintVerify’s KYC solutions to ensure your verification process is bulletproof.

Frequently Asked Questions (FAQ)

Q1. When will the DPDP Act be enforced?

Q2. What data falls under DPDP?

Q3. What about non-digital data?

Q4. Does the Act apply to foreign companies?

Q5. Are there any exemptions?