The rule, which was imposed last year by the Reserve Bank of India (RBI), has proved especially unpopular with global payments providers, international tech firms, e-commerce companies and the US government. The Indian government's decision to review the rule comes at a time when trade relations between India and the US have become strained with the imposition of retalitory tariffs from both sides.

Despite the lobbying efforts of Visa, Mastercard and American Express, the RBI's rule has remained in place but, according to the Economic Times, commerce minster Piyush Goyal has promised to review the rule following a meeting with international technology firm bosses.  

In addition to the RBI's rule on payments data, the India government also has introduced its own law on personal data which says that all persoanl data deemed to be 'critical' must be processed locally. 

Payments data has become a much more valuable resource for e-commerce firms. Meaanwhile the use of cloud computing has helped to solve many of the concerns around the limits of data storage. However, rules on the portability of data and efforts ensure data does not cross borders threatens to limit some of the benefits of new technology such as the cloud and also the blockchain.

In addition there are also concerns that Indian authorities desire to see more data centres and server farms to be established locally will raise costs for multinational firms and possibly make them reconsider plans to expand their businesses in India.

According to the Economic Times, the tech firms have asked the minister to provide more clarity on what is deemed to be critical personal data. Meanwhile US secretary of state Mike Pompeo raised the issue ahead of a planned visit to new Delhi later in June. "We'll also push for free flow of data across borders, not just to help American companies, but to protect data and secure consumers' privacy," he said. 

India's commerce minister has reportedly vowed to consider companies' suggestions "towards building a robust data protection framework that will achieve the dual purpose of privacy and innovation", which has been interpreted as a potential softening of its stance on data protability.  it said, signalling the government could possibly go soft on implementing the rules.

"[The] commerce Minister assured the e-commerce industry representatives that each and every concern of the industry will be addressed," the government said.