DPDP Act Impact on Startups and SMEs in India
- Blog|Company Law|
- 3 Min Read
- By Taxmann
- |
- Last Updated on 4 May, 2025
Latest from Taxmann
The Digital Personal Data Protection (DPDP) Act impacts start-ups by introducing mandatory data privacy and protection obligations, regardless of their size or growth stage. Start-ups handling personal data must now implement robust compliance measures such as obtaining valid consent, ensuring data security safeguards, managing breach notifications, and enabling data deletion rights.
Table of Contents
- Why Start‑ups Cannot Ignore DPDP?
- Proposed “Notified Start‑up” Reliefs (Draft Rules, Jan 2025)
- Lean‑Budget Compliance Stack
- Data‑Deletion Automation
- Investor Due Diligence Checklist
- Conclusion
Check out Taxmann's Digital Personal Data Protection Act 2023 with Draft Rules – Bare Act with Section Notes which offers a robust framework for India's data privacy landscape. It clarifies rights and safeguards for Data Principals, details obligations for Data Fiduciaries, and highlights recent legislative updates from statutes like the IT Act and RTI Act. Comprehensive Section Notes and FAQs delve into key principles such as consent and cross-border transfers, simplifying complex provisions for easy reference. The book's structured approach, with illustrations, indexes, and a clear layout, caters to legal practitioners, corporate counsels, regulators, students, and IT professionals.
1. Why Start‑ups Cannot Ignore DPDP?
- Venture capital term sheets now mandate a privacy‑compliance representation.
- Global clients evaluate DPIA & SCC before signing SaaS contracts.
- A single DPB penalty (₹50 crore) can erase the runway.
2. Proposed “Notified Start‑up” Reliefs (Draft Rules, Jan 2025)
| Eligibility | Compliance Eased | Still Obligatory |
| Turnover < ₹40 crore and < 1 lakh Data Principals | No independent audit; longer grievance SLA (45 days) | Consent, security safeguards, breach notification |
Caveat – The relief disappears once either threshold is breached for two consecutive quarters.
3. Lean‑Budget Compliance Stack
- Privacy‑by‑Design Sprint – 2‑week design‑thinking workshop; integrate data‑mapping in product backlog.
- Open‑Source Consent Manager – adopt GoI’s forthcoming Consent‑Manager SDK instead of building from scratch.
- Cloud‑Native Security – use CSP‑managed encryption keys + AWS GuardDuty/Azure Defender to meet “reasonable safeguards.”
- Template Policies – leverage Taxmann’s downloadable privacy notice and breach notice templates.
4. Data‑Deletion Automation
| Stage | Tool | Cost (₹) |
| User sign‑out event triggers | Serverless function | 0.10 per 10,000 runs |
| Queue erasure jobs | Managed message queue | Pay‑as‑go |
| Verify legal holds | Tag‑based data‑store scan | – |
5. Investor Due Diligence Checklist
- Latest VAPT report (< 6 months).
- Consent‑log export (random sample of 20 users).
- Breach‑drill documentation.
- DPIA for any AI/ML pipeline.
6. Conclusion
The DPDP Act’s obligations are scalable. By embedding privacy into early architecture, start‑ups avoid retrofit costs and enhance fundraising prospects.
Dive Deeper:
Scope and Key Definitions Under DPDP Act
Overview of Digital Personal Data Protection Act (DPDP Act) 2023
Rights of Data Principals under the DPDP Act 2023
Lawful Processing and Consent under DPDP Act 2023
Cross‑Border Data Transfers under the DPDP Act 2023
Obligations of Data Fiduciaries under DPDP Act 2023
DPDP Act Compliance Checklist for Businesses
Data Privacy Breach | Enforcement | Penalties under the DPDP Act
DPDP Act vs IT Act – Shifting India’s Data‑protection Paradigm
DPDP Act vs EU GDPR Compliance – A Comparative Analysis
FinTech and BFSI – Sector-specific Guidance for DPDP Compliance
DPDP in Healthcare Ecosystem – HealthTech and Hospitals
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
CA | CS | CMA
