Data Breach in India: Legal Obligations and First Steps

Introduction

A data breach is more than just a tech problem—it’s a legal emergency. With the Digital Personal Data Protection Act, 2023 (DPDP Act) and the Information Technology Act, 2000 prescribing strict compliance requirements, businesses in India are now under greater scrutiny than ever before when personal data is compromised.

This article outlines what qualifies as a data breach under Indian law, your immediate legal obligations, and how to respond effectively to reduce regulatory and reputational fallout.

1. What Is a Data Breach?

   A data breach is any unauthorised access to, disclosure of, or loss of control over personal data. This can include:

   • Hacking or ransomware attacks

   • Accidental exposure of sensitive data

   • Loss of physical devices containing personal data

   • Insider threats or employee negligence

Both personal data and sensitive personal data are protected under Indian law.

2. Applicable Legal Framework in India

Law / Regulation	Relevance to Data Breach Response
IT Act, 2000 – Section 43A	Requires implementation of reasonable security practices and compensation for data loss due to negligence.
IT Rules, 2011	Mandates a privacy policy and appointment of a grievance officer.
DPDP Act, 2023	Introduces mandatory breach reporting and penalties up to ₹250 crore.
Sectoral Guidelines	RBI, SEBI, IRDAI and others mandate sector-specific breach disclosures.

3. Who Must Comply?

   Any entity that qualifies as a Data Fiduciary under the DPDP Act—including startups, MNCs, e-commerce platforms, fintech, healthcare providers, and government departments—must comply with data breach obligations if they collect, store, or process digital personal data.

   
   

4. Mandatory Breach Notification: What the Law Says

   Under the DPDP Act, 2023, in the event of a personal data breach:

   • Notify the Data Protection Board of India: As soon as possible, no later than the time prescribed by future rules (expected to mirror GDPR-like timelines).

   • Notify Affected Individuals: If the breach is likely to cause harm (e.g., identity theft, financial loss, reputational damage), affected users must be informed in clear language.

   • Maintain Internal Records: All breaches—whether reportable or not—must be documented internally for compliance verification.

     
     

5. First Legal Steps After a Data Breach

   If your business suffers a breach, follow these steps immediately:

   1. Contain the Breach

      Isolate affected systems and stop the unauthorised access.

      
      

   2. Assemble an Incident Response Team

      Include IT, legal, and communication personnel to coordinate the response.

      
      

   3. Conduct Preliminary Assessment

      What data was affected? How many users? Was it encrypted? Are there signs of misuse?

      
      

   4. Notify the Authorities and Individuals

      As required by the DPDP Act and any sectoral regulations.

      
      

   5. Preserve Evidence

      Log files, breach snapshots, and communication trails for regulatory review.

      
      

   6. Engage Legal Counsel

      To draft notifications, advise on potential penalties, and liaise with the Data Protection Board.

      
      

6. Penalties for Failing to Respond Correctly

   Under the DPDP Act, penalties for breach-related failures include:

Failure Type	Maximum Penalty
Failure to take reasonable safeguards	₹250 crore
Failure to notify the Board or affected users	₹200 crore
Non-cooperation during inquiries	₹50 crore

7. Can You Be Sued for a Data Breach in India?

   Yes. Apart from regulatory penalties:

   • Users may claim compensation under Section 43A of the IT Act.

   • Class action lawsuits may be viable in large breaches.

   • Shareholders, investors, and partners may initiate proceedings for loss of value or reputational harm.

8. How Apar Law Helps in Breach Response

   We offer 360° legal support for data breach management:

   • Immediate breach response strategy and legal compliance

   • Drafting and filing notifications to regulators and individuals

   • Reviewing contracts and policies for liability control

   • Conducting internal data audits and root cause analysis

   • Representing companies before the Data Protection Board

Conclusion

A delayed or mishandled data breach response can result in massive penalties and loss of consumer trust. With the DPDP Act now in force, every business collecting digital personal data in India must be legally prepared to act fast and smart during a breach.

Was your business affected by a data breach? Apar Law provides breach response counsel and regulatory representation to help you comply with Indian data protection laws. Reach out to us today for a confidential consultation.