Data protection has moved to the forefront of India’s regulatory agenda with the introduction of the Digital Personal Data Protection (DPDP) Rules. While large enterprises scramble to align their systems, a recent interview with Tejas Goenka, Managing Director of Tally Solutions, reveals a worrying gap: most micro, small and medium enterprises (MSMEs) remain unaware of the compliance timeline and requirements. This article unpacks the DPDP framework, explores why MSMEs are falling behind, outlines actionable steps for readiness, and assesses the broader impact once enforcement kicks in.
Understanding the DPDP framework
The DPDP Rules, finalized in October 2024, establish a unified legal structure for handling personal data across all sectors. Key provisions include:
- Consent management – explicit user consent is mandatory before processing personal data.
- Data minimisation – organisations must collect only data that is necessary for the declared purpose.
- Accountability – data fiduciaries must maintain records, conduct impact assessments, and appoint a Data Protection Officer where required.
- Cross‑border transfers – stringent conditions apply for moving data outside India.
Non‑compliance can attract penalties of up to 4% of global turnover or ₹25 crore, whichever is higher. Enforcement is slated to begin on 1 January 2026, giving businesses a narrow window to adapt.
Why MSMEs are missing the memo
Several factors explain the low awareness among MSMEs:
- Resource constraints – limited budgets and staffing make it hard to monitor regulatory updates.
- Fragmented communication – many MSMEs rely on informal networks rather than official channels for legal news.
- Perceived irrelevance – smaller firms often assume data protection rules target only large tech players.
Goenka notes that “over 70 % of the MSMEs we surveyed have not even heard of the DPDP Rules,” underscoring a systemic information gap.
Tally Solutions’ call to action
As a leading provider of business‑management software, Tally Solutions is positioning itself as a compliance enabler. The company plans to roll out a suite of features, including:
- Automated consent capture widgets embedded in invoicing and inventory modules.
- Pre‑built templates for data‑mapping and impact‑assessment reports.
- Guided workflows for appointing a Data Protection Officer within the platform.
These tools aim to lower the technical barrier for MSMEs, allowing them to embed compliance without hiring dedicated legal teams.
Practical steps for compliance
MSMEs can start preparing today by following a simple three‑phase roadmap:
- Audit: Identify all personal data touchpoints—customer records, employee files, supplier contracts.
- Align: Update policies to reflect consent, purpose limitation, and retention schedules. Leverage Tally’s templates where possible.
- Implement: Deploy technical controls such as encryption, access logs, and breach‑notification mechanisms.
Below is a concise timeline of the DPDP milestones relevant to MSMEs:
| Milestone | Date | Implication for MSMEs |
|---|---|---|
| Draft rules released | May 2024 | Initial awareness period |
| Final rules published | Oct 2024 | Compliance design begins |
| Enforcement start | Jan 2026 | Penalties applicable |
Looking ahead: enforcement and impact
When enforcement commences, regulators will likely prioritise high‑risk sectors—finance, health, and e‑commerce—before expanding to broader MSME categories. Early adopters that embed DPDP‑ready processes stand to gain competitive advantage, as customers increasingly demand transparent data handling.
In summary, the DPDP Rules represent a watershed moment for data governance in India. While most MSMEs are still in the dark, the combined push from industry leaders like Tally Solutions and growing regulatory scrutiny will accelerate awareness. By auditing data assets, aligning policies, and leveraging ready‑made compliance tools, MSMEs can not only avoid hefty fines but also build trust with their stakeholders, positioning themselves for sustainable growth in a data‑centric economy.
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