The government should consider formulation of a separate policy to incentivise processing of data in India, research firm CUTS International said on Friday.
It also suggested the government that there is a need to focus on enhancing consumers' privacy by avoiding unjustified data access by third parties, pruning state exemptions, and making government's request for data subject to judicial review.
Besides, it said, the government should focus on data driven innovation, combating data breaches and setting up an effective grievance redressal mechanism.
There is a need to set clear standards for defining scope of sensitive and critical personal data, CUTS International said in a statement.
"A separate policy to incentivise processing of data in India may be formulated," it said.
These recommendations assume significance as the government is in the process of formulating a national e-commerce policy and has approved Personal Data Protection Bill.
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The Bill spells out a framework for handling of personal data, including its processing by public and private entities.
It is likely to contain broad guidelines on collection, storage and processing of personal data, consent of individuals, penalties and compensation, code of conduct and an enforcement model.