The rollout of the Digital Personal Data Protection Act (DPDP) rules in November has created fresh urgency for companies working with artificial intelligence. While the staggered execution of the rules gives some breathing room to enterprises, AI projects need immediate planning because they depend heavily on data quality for training, automation and customer experience.
Under the new rules, organisations must obtain clear and informed consent from users for every specific data processing activity. Consent requests must be written in simple and unambiguous language, and individuals can also request erasure of their personal data. The act encourages collecting only the minimum amount of data that is necessary. These requirements add pressure on AI model training since models rely on large and diverse datasets, and the right to erase data can affect projects still in development. As Sakshi Grover, Senior Research Manager, Cybersecurity, IDC Asia Pacific, explains, “AI deployments will require structured consent handling, governed data pipelines, auditable model inputs, and stronger anonymization practices.” Venture capital leader Venk Krishnan adds that the rules will challenge AI companies working on the foundation layer because they need access to larger datasets, while those at the application layer will feel less impact.
Compliance costs are expected to rise as service providers take on a major role in supporting data protection needs. IDC research shows that 22 percent of Indian enterprises will require external help for privacy and security tasks such as anonymization, encryption and consent management within AI systems. Krishnan notes that although compliance will add overhead for startups, it will not disrupt product development significantly. He also points out that this environment may create opportunities for risk advisory firms and suggests that startups may turn to synthetic or computer-generated datasets as cost efficient alternatives for training models. Grover says enterprises will increase investments in data discovery, lineage tracking and automated protection tools.
The rules are also set to influence cloud strategies. Grover says the DPDP framework strengthens accountability and demands clarity on data residence, especially in multi cloud setups. She adds that cloud adoption will move toward providers offering granular data residency options and verifiable compliance mapping. IDC’s latest study shows that 52 percent of Indian enterprises plan to modernize security with a focus on data protection and recovery in the next 24 months. The growing need for privacy engineering, DPDP compliance design and data risk quantification will drive demand for consulting, legal and managed security services.
The privacy technology segment is expected to gain momentum as enterprises adopt automated classification, masking and protection tools, with 63 percent planning such investments within 12 months. Grover says, “Enterprises can leverage DPDP alignment to differentiate services, build consumer confidence, and create new data driven offerings that would not have been viable under weaker governance.” The new rules will also create openings for startups building privacy first AI, consent management systems and data governance solutions.
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