Decoding the DPDP Act: What’s Required and How DSPM Simplifies Compliance

India has ushered in a new era of data privacy with the landmark Digital Personal Data Protection (DPDP) Act, 2023. Like the GDPR, the DPDP Act sets strict guidelines for how organizations must collect, process, and safeguard personal data, introducing substantial penalties for non-compliance. Data protection is no longer just an IT responsibility—it’s a critical business priority. In this blog, learn about the DPDP Act, understand new requirements and best practices checklist designed to achieve compliance before enforcement begins.

Background

The DPDP Act was enacted in India to strengthen the protection of personal data in the digital ecosystem. Driven by increasing digitalization and concerns over privacy, the Act introduces comprehensive rules governing how organizations collect, process, store, and transfer personal data, ensuring individuals’ data rights and accountability of businesses.

Key Challenges 

The DPDP Act presents several challenges for businesses, including managing stricter consent requirements, ensuring data localization, and addressing enhanced data subject rights. Organisations must also mitigate risks associated with vendor compliance and adapt to potential financial penalties, requiring significant updates to data governance frameworks and operational processes. Some of the key challenges include: 

• Stringent Consent Requirements: The Act requires businesses to obtain clear and explicit consent for data collection and processing, including data collected offline (that is later digitized), increases administrative tasks and requires robust consent management systems. Recently, exemptions and consent guidelines have been revised. 
• Data Localization Mandates: Businesses may need to store and process certain categories of personal data within India, which can increase infrastructure costs and operational complexity. The recently issued draft implementation rules, the Digital Personal Data Protection Rules, 2025  contain guidelines for international data transfers.
• Enhanced Data Subject Rights: Responding to requests for data access, correction, and erasure puts pressure on data management processes and workflow efficiency.
• Hefty Penalties for Non-compliance: Significant fines for violations and increased fines up to 250 Crores (approx. $30M per violation, alongside significant operational and reputational damage) create a strong need for compliance audits, continuous monitoring, and updated policies.
• Vendor and Third-Party Risk Management: Ensuring that partners and processors also comply with the DPDP Act introduces new diligence and monitoring requirements across the supply chain.

Best Practices to align with DPDP Act

Understand Your Data Universe

Under India’s DPDP Act, personal data includes any digitally collected or digitized information that can identify an individual—customers, employees, or vendors. Identify where personal data resides, categorize it by sensitivity, and link it to data principals and its collection purpose. This is essential for effective DPDP compliance.

DPDP Compliance and Risk Assessment

Organisations need to assess complete compliance posture along with third parties. Key steps include gap analysis, high-risk activities, and using digital tools for streamlined assessments. Mapping compliance maturity helps prioritize actions, ensuring a proactive and effective approach to DPDP Act compliance.

Consent and Privacy

The DPDP Act emphasizes informed, specific, and granular consent. Organizations must ensure robust consent mechanisms that can capture consent, purpose and more before data collection. Also, organizations need to ensure they have complete visibility and control over personal data that is being collected, accessed and used. Organizations need to also enforce privacy policies, practices and consent rights that reflect compliance posture, build trust and align with the DPDP mandate for fair processing.

Data Retention and Processing 

It’s crucial for organizations to chalk out complete data retention, sharing and processing agreements in light of the DPDP Act that includes clauses for breach notification, data retention, and data subject rights clearly defining responsibilities and liabilities under the Act to avoid regulatory fallout.

Incident Response 

The DPDP Act requires prompt reporting of data breaches to the Data Protection Board of India (Data Protection Board) and affected users. Organizations need to establish incident response mechanisms that help alerting, reporting, and remediating violations to prevent severe penalties.

Automated Governance

Relying on manual compliance is error-prone and unsustainable. Organisations can deploy platforms like DSPM for automated data discovery, classification, and compliance risk assessments. With end-to-end visibility and control, platforms like DSPM ensure you remain audit-ready and maintain continuous compliance with the DPDP Act requirements.
 

Addressing the DPDP Act challenges with DSPM 

DSPM (Data Security Posture Management) is not just a helpful tool for meeting the DPDP Act compliance requirements—it serves as the foundation for effective data protection under the Act. As the DPDP Act enforces stringent controls around the collection, handling, storage, and security of personal data, DSPM provides the structured framework needed to uphold these mandates. Its advanced features, like automated data discovery, real-time risk identification, and detailed data classification, directly align with the Act’s core obligations. 

Fig: DSPM Compliance Dashboard 

With DSPM, organizations can confidently map, manage, and secure personal data, streamline compliance efforts, and demonstrate accountability to regulators. In short, DSPM bridges critical gaps, making DPDP compliance practical, repeatable, and robust across business functions.

Fig: DSPM - DPDP Act Dashboard 

 
Here’s how its capabilities directly map to the Act’s requirements:

• Discover and Classify “Digital Personal Data”: DSPM automates data discovery and classification that enables organizations to understand what personal data is held, where it resides, and how it’s being processed, key for the DPDP Act compliance.

Fig: DSPM DPDP Compliance mapping data outside India

• Implementing “Reasonable Security Safeguards”: DSPM proactively identifies risks like overexposed data, misconfigured storage, and weak access controls, enabling organisations to enforce strong security controls required under the DPDP Act.
• Demonstrating Accountability: DSPM helps with continuous monitoring and reporting, and provides tangible evidence of due diligence and data protection measures, assisting in demonstrating accountability to the Data Protection Board.
• Facilitating Incident Response: With real-time visibility, DSPM helps organisations assess breach risk swiftly and meet DPDP Act incident response and notification obligations.
• Data Minimization: By inventorying and classifying data, DSPM alerts the team on data usage streamlining the necessary data retention process, supporting DPDP’s principles of purpose limitation and data minimization.
• Consent Management: DSPM’s “Data Discovery & Classification” first step in any robust consent management lifecycle that provides the critical prerequisite: knowing what personal data you hold and where it is.
• Data Privacy: DSPM provides data intelligence needed for privacy-by-design practices and thorough Data Protection Risk Assessments.

Benefits of DSPM for the DPDP Act and beyond

• Reduced risk of data breaches: Proactive identification and remediation of compliance violation and security vulnerabilities.
• Improved compliance: Streamlined process for identifying and classifying personal data.
• Enhanced data security: Implementation of appropriate security controls based on data sensitivity.
• Cost savings: Reduced risk of penalties and reputational damage associated with data breaches. 

In essence, DSPM acts as a powerful tool for organizations navigating the complexities of the the DPDP Act, helping them to not only comply with its requirements but also enhance their overall data security posture.
 

Final Thoughts

The DPDP Act is not a one-time checkbox—it demands continuous, demonstrable accountability. Businesses must view it as a catalyst for digital transformation, not just a regulatory hurdle.

DSPM helps organizations modernize their security stack protecting sensitive data at scale and easing compliance efforts with ever-changing laws like DPDP. By embracing DSPM, organizations can confidently navigate the complexities of the DPDP Act, build robust security frameworks, mitigate significant risks, and ultimately cultivate the trust that will demonstrate leadership in a dynamic digital economy. The time to invest in a comprehensive DSPM strategy is now — your data’s security and your organization’s future depend on it.

Is your business ready for the DPDP Act?

Talk to a Zscaler expert today to explore how our DSPM solution can streamline your compliance journey.





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