DPDP Act Explained: What Every Business Needs to Know

In 2023, India saw over 67,000 digital data breaches. By 2025, protecting customer data is no longer just an IT responsibility. It is a legal and business imperative for every organization.

The Digital Personal Data Protection Act (DPDP Act), 2023, is India’s landmark law governing the collection, storage, and use of digital personal data. It balances citizens’ rights to privacy with the need for lawful data processing and sets clear obligations for businesses handling personal information.

With cyber threats continuing to rise, safeguarding customer data is critical. The DPDP Act, fully operational under the Draft Rules notified in January 2025, marks a turning point in how businesses collect, process, and protect consumer data. Even a single weak link in your vendor chain can expose sensitive information, and the law holds you accountable.

Whether you are a small business, regional dealership, or large OEM, the DPDP Act applies to you, including your partners, agencies, and third-party vendors. This means your marketing, lead generation, and customer engagement operations must comply with the Act’s requirements.

In this blog, we break down the DPDP Act in simple terms, explain what it means for your business in 2025, and show how you can stay compliant, even when outsourcing or using third-party services.

What is the DPDP Act?

The DPDP Act establishes a legal framework to protect citizens’ privacy and ensure transparent, fair, and secure processing of personal data. It defines clear roles, responsibilities, and accountability across the data ecosystem.

Key Highlights (2025 Updates):

Purpose: Protect personal data and empower individuals to control their information.

Applicability:

- Businesses operating in India

- Foreign companies handling the personal data of Indian citizens

- Startups, agencies, dealerships, franchises, and third-party vendors

Scope: Covers names, emails, phone numbers, location data, purchase history, and other digital personal data. 

Key Takeaway: Outsourcing data handling does not transfer legal accountability. Businesses must ensure compliance across all partners and vendors.

Key Terms to Know in the Digital Personal Data Protection (DPDP) Act

Understanding these terms helps your business manage responsibilities and reduce compliance risk.

1. Data Principal

The individual whose personal data is collected. Examples include a customer filling out a lead form or booking a service. The DPDP Act ensures Data Principals have rights over how their data is used and shared.

2. Data Fiduciary 

The entity that decides the purpose and method of processing personal data. Examples include dealerships, OEMs, e-commerce platforms, and agencies. The Data Fiduciary remains fully accountable even if a third-party vendor mishandles the data.

3. Data Processor

A third-party service provider that handles personal data on behalf of the Data Fiduciary. Examples include marketing agencies, CRM providers, or call centers. They manage operations, but the legal responsibility stays with the Data Fiduciary.

Key Takeaway: You can outsource execution, but not accountability. Ensure all partners and vendors comply with the DPDP Act.

Gain more insights: Watch this short video on Consent and Compliance: Navigating Privacy in Retail Marketing to understand practical steps for 2025 compliance. "Consent and Compliance: Navigating Privacy in Retail Marketing"  

What the DPDP Act Requires from You

The Digital Personal Data Protection Act (DPDP Act), 2023, defines clear responsibilities for businesses handling personal data, whether you are collecting leads from a website, managing customer databases, or running marketing campaigns through third-party partners.

Here’s what every Data Fiduciary must do to stay compliant in 2025:

1. Clear and Informed Consent

Obtain explicit consent from users before collecting their personal data. Consent must be informed, specific, and freely given. Avoid burying terms in fine print. Users should clearly understand what data is collected, why it is collected, and how it will be used.

2. Purpose Limitation

Use personal data only for the purpose for which the user has provided consent. For instance, if a customer shares data to schedule a test drive, that data cannot be repurposed for unrelated marketing campaigns.

3. Data Minimization

Collect only the data that is necessary for your intended purpose. For example, do not ask for a date of birth if it is not relevant to the service being provided.

4. Storage Limitation

Keep data only as long as needed for its intended purpose. Implement data lifecycle management practices, and ensure that unnecessary or outdated data is securely deleted in line with the DPDP Act.

5. Accountability

Even if a third-party vendor collects, stores, or processes personal data on your behalf, you remain fully responsible as the Data Fiduciary. Any mishandling of data by partners still carries legal and financial risk under the DPDP Act.

Compliance is not optional. The DPDP Act applies to every business handling Indian citizens’ personal data, and failing to comply can result in:

- Hefty financial penalties

- Data breaches

- Long-term reputational damage

Pro Tip: Conduct regular audits of your vendors and data handling practices to ensure compliance across all touchpoints.

Why You Can’t Afford to Ignore the DPDP Act

Ignoring the Digital Personal Data Protection Act (DPDP Act), 2023 is no longer just a compliance risk. It can seriously damage your brand, erode customer trust, and attract heavy legal penalties.

1. Hefty Penalties

Under the DPDP Act, businesses can face fines up to ₹250 crore for non-compliance. Even a single breach caused by a third-party vendor or internal oversight can trigger these penalties. This makes it crucial to implement robust data protection measures.

2. Reputation at Risk

A data breach does not just make headlines. It breaks the trust you have built with your customers. Once sensitive information is compromised, regaining credibility is costly and time-consuming. Prioritizing data protection demonstrates responsibility and strengthens your brand’s reputation.

3. Vendor Blind Spots

Many businesses, especially OEMs, dealerships, and e-commerce platforms, outsource lead generation, marketing, or data handling to third-party vendors. If these vendors fail to comply with DPDP requirements, the legal accountability remains with your business.

Key Insight: You cannot delegate accountability. The DPDP Act holds the Data Fiduciary responsible even if a third party mishandles the data.

4. Operational and Strategic Risks

Non-compliance can lead to:

- Operational disruptions due to investigations or audits

- Customer churn as users lose trust in your brand

- Financial losses from penalties and breach remediation

5. Competitive Advantage for Compliant Businesses

Businesses that proactively comply with the DPDP Act can differentiate themselves in the market. Data privacy becomes a trust-building tool, attracting privacy-conscious customers and partners.

Pro Tip: Conduct regular audits of your vendors, data handling processes, and internal systems. Ensure all consent management, storage, and processing practices are fully aligned with DPDP Act requirements to minimize legal and reputational risks.

Real-World Relevance: The OEM - Vendor Risk Chain and the DPDP Act

In today’s digital ecosystem, your data security is only as strong as your weakest vendor. Under the Digital Personal Data Protection Act (DPDP Act), 2023, even a single weak link can create legal and reputational exposure for your business.

One Weak Link = Total Exposure

Consider these scenarios:

- A marketing agency running a lead-generation campaign mishandles customer data

- A call center accesses unmasked customer information without proper safeguards

- A vendor stores emails or phone numbers in unsecured spreadsheets

Even one non-compliant partner can trigger a data breach, and the Data Fiduciary remains fully accountable under the DPDP Act.

The OEM-Dealer-Vendor Chain

If a dealer executes a campaign and a vendor mishandles the data, the presence of the OEM’s branding on digital assets can implicate the brand directly. The DPDP Act ensures that legal and reputational accountability is shared across the chain, even if the OEM did not directly manage the data.

Reputational Risk is Shared

- Breach at the dealer or vendor level can lead to public backlash against OEMs

- Customers may lose trust in both the dealer and the OEM brand

- Regulatory investigations may impact business operations and partnerships

Key Takeaway: The DPDP Act places legal accountability squarely on the Data Fiduciary, making it essential for businesses to:

- Vet all vendors for compliance

- Sign Data Processing Agreements (DPAs)

- Conduct regular audits of data handling processes

- Implement privacy-by-design systems across the ecosystem

Pro Tip: Treat your entire data ecosystem as a single security perimeter. Ensuring vendor compliance and transparency safeguards your brand, reduces legal risk, and builds customer trust.

Read Also - 5km Radius Strategy for Hyperlocal Auto Dealer Discovery

How Sekel Tech Helps You Stay Compliant with the Digital Personal Data Protection Act (DPDP Act)

Sekel Tech offers a comprehensive approach to data privacy and security, ensuring that businesses using its hyperlocal discovery and omnicommerce platform remain fully compliant with India’s Digital Personal Data Protection Act (DPDP Act). Here’s how Sekel Tech supports your compliance journey in 2025:

1. Consent-Driven Data Collection and Processing

Sekel Tech’s solutions are built around clear, explicit consent mechanisms, allowing customers to control how their personal data is collected, processed, and shared. Users can view consent terms easily and withdraw consent at any time, aligning with the DPDP Act’s emphasis on transparency and user control.

2. Data Subject Rights Management

The platform includes built-in tools to manage data subject rights, such as access, correction, and erasure requests. This automated infrastructure enables businesses to respond quickly and consistently to user requests, ensuring compliance with the DPDP Act’s legal obligations. Data erasure requests are processed programmatically, ensuring prompt and accurate deletion.

3. Robust Security and Data Protection Measures

Sekel Tech applies advanced security protocols to safeguard data, including end-to-end encryption, role-based access control (RBAC), two-factor authentication, and Web Application Firewalls (WAF). Regular compliance audits, vulnerability assessments, and continuous monitoring strengthen security and help businesses stay ahead of potential threats.

4. Data Localization and Secure Infrastructure

Sekel Tech’s hyperlocal data fabric ensures that the personal data of Indian citizens is stored and processed within India, supporting DPDP Act localization requirements while maintaining performance and accessibility. Data is securely backed up through trusted cloud partners like AWS and Google Cloud to ensure high availability and resilience.

5. Compliance Certifications and Global Standards

Sekel Tech is certified for SOC 2 Type I & II and ISO/IEC 27001:2022, and GDPR-compliant practices. These globally recognized standards demonstrate a mature approach to information security and privacy. Since GDPR and DPDP share core principles of consent, transparency, and accountability, Sekel Tech’s alignment with international frameworks gives businesses a strong compliance foundation.

6. Privacy-First Platform Design and Partner Support

The platform is built with privacy by design, making compliance simple for brands, dealerships, franchises, and partners. Sekel Tech provides thorough documentation, transparent privacy policies, and responsive partner support to help businesses meet their compliance responsibilities, even if they don’t have in-house privacy teams.

7. Proactive Incident Response and Accountability

Sekel Tech maintains detailed activity logs and has proactive incident response protocols to ensure that any data incidents are handled swiftly and transparently. This supports businesses in meeting their DPDP Act reporting and accountability requirements, minimizing legal and reputational risks.

Sekel Tech doesn’t just help you comply with the DPDP Act; it makes compliance operationally simple and scalable, so your teams can focus on growth with confidence.

Key DPDP Compliance Features at Sekel Tech

Sekel Tech’s holistic, privacy-first approach ensures that your business can confidently meet the requirements of the DPDP Act, protecting both your customers’ data and your organization’s reputation.

“With Sekel Tech, you gain more than leads; you gain data peace of mind.
Protect your brand, secure your data, and ensure full compliance - all from one intelligent platform.”

What the DPDP Act Says About Customer Data Leaks

In January 2025, the IT Ministry released the Draft Digital Personal Data Protection Rules to operationalize the 2023 Act. These rules clarify how businesses must prevent, detect, and respond to customer data leaks, reinforcing accountability across the entire data lifecycle.

Under Rule 6, Data Fiduciaries are required to implement strong technical and organizational safeguards, including data encryption, role-based access control, and secure logging for at least one year, to reduce the risk of breaches.

Rule 7 mandates that breaches must be reported to both the Data Protection Board and affected Data Principals within 72 hours, including details such as cause, mitigation steps, and the responsible contact person, ensuring full transparency and timely response.

Why this matters: Even a small leak of sensitive customer data can trigger penalties up to ₹250 crore under the DPDP Act, not to mention significant reputation loss for your brand.

Quick Checklist for Data Leak Preparedness

- Encrypt all stored and transmitted data

- Enable role-based access control (RBAC)

- Maintain audit logs for at least one year

- Establish a 72-hour breach response workflow

- Keep customer communication channels ready for prompt notifications

How to Manage Customer Data Under the DPDP Act

The Draft DPDP Rules, 2025 emphasize that customer data management must be transparent, purpose-driven, and time-bound, from collection to retention and erasure.

Rule 3 requires Data Fiduciaries to provide plain-language notices explaining:

- What personal data is collected (e.g., name, email, location, purchase history)

- Why is it collected (e.g., improving services, marketing)

- How users can withdraw consent or exercise their rights

Rule 8 introduces strict retention limits. Examples:

Rule 13 ensures businesses provide easy ways for customers to access, correct, or erase their data, responding within set timeframes, which is especially important for automotive dealers, retailers, and hyperlocal platforms managing large lead volumes daily.

Key Dos for Data Fiduciaries

- Provide clear, consent-based notices

- Register consent managers for standardized data collection

- Conduct annual Data Protection Impact Assessments (DPIAs) if handling - large or sensitive datasets

- Publish Data Protection Officer contact information (Rule 9)

- Erase inactive data after retention limits expire

Key Don’ts

- Don’t delay breach notifications beyond 72 hours

- Don’t process children’s data without verifiable parental consent

- Don’t retain unnecessary data indefinitely

- Don’t transfer data abroad without Central Government approval (Rule 14)

Aligning your practices with these rules not only avoids legal penalties but also builds trust with customers, a key advantage in hyperlocal and omnichannel marketing.

FAQs: Digital Personal Data Protection Act (DPDP Act 2025)

Q1: What are the DPDP Rules 2025?

The DPDP Rules 2025 operationalize the 2023 DPDP Act. They define obligations for businesses (Data Fiduciaries), including consent management,data protection, breach reporting, retention limits, and user rights.

Q2: What is the DPDP Act in India?

The DPDP Act, 2023, is India’s law to protect personal digital data. It balances individual privacy with lawful business use and sets responsibilities for businesses and vendors handling personal data.

Q3: What is the difference between the DPDP Act and the Rules?

- Act: The law passed by Parliament in 2023 establishes rights, duties, and penalties.

- Rules (2025): Detailed operational guidelines for compliance, including data retention, breach reporting, and user rights.

Q4: Does the Data Protection Act apply to all data?

It applies to the digital personal data of Indian citizens. This includes names, emails, phone numbers, location data, purchase history, and other identifiable information.

Q5: Who is not covered by data protection?

The DPDP Act does not apply to anonymized data, purely business-to-business internal data, or data collected by certain government bodies for official purposes, unless used commercially.

Conclusion: Data Privacy is Brand Safety

In today’s digital landscape, data privacy is inseparable from brand safety. Protecting customer data is not just a legal obligation under the Digital Personal Data Protection Act (DPDP Act); it is a critical factor in building and maintaining trust with your audience. Brands that prioritize data privacy demonstrate responsibility, transparency, and respect for their customers, essential elements for long-term reputation and business success.

By leveraging Sekel Tech’s platform, businesses gain access to robust privacy-first tools and automated compliance features. These solutions help safeguard personal data, honor user rights, and ensure full alignment with the DPDP Act. Sekel Tech’s secure infrastructure, consent-driven data practices, and proactive compliance support empower your business to meet regulatory requirements while elevating brand trust in the market.

Take advantage of Sekel Tech’s platform to make data privacy your brand’s strongest asset, ensuring your brand remains safe, compliant, and trusted in the digital era.

Citations & References

The Hindu: IT Ministry notifies draft rules under data protection law
Innovate India: Draft Digital Personal Data Protection Rules, 2025
National Law Review: Key Highlights of India's Draft Digital Personal Data Protection Rules, 2025

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