Has MCIT issued the guidelines without proper evaluation?
I would like to bring to
the notice of the Central Vigilance Commission and the Comptroller and
Auditor General of India an apparent irregularity that needs
investigation in the interest of the Country. The issue involves
according to one estimation a decision proposed to be taken by the
Ministry of communications and Information technology resulting in IT
stake holders collectively spending Rs 700 crores immediately by a
payment to a private party abroad just to know what is the law of
Information security in India that applies to them. Stakeholders who
want to comply with the law later may collectively be required to spend
around Rs 30000 crores each year to follow the law as being notified and
this commercial benefit is again going to private sector because of this
There is a need therefore
to stop the approval of the proposed notification until a national
debate is undertaken in the matter and all stakeholders are convinced
that there is no reason to suspect irregularity in the promotion of a
commerical benefit of this magnitude.
In February 2011, MCIT had issued a draft notification regarding Section
43A of ITA 2008 for public comments. Naavi.org had raised an issue
titled " Is
India selling itself out to ISO 27001?
Essentially the article had pointed out that the draft guidelines on
Section 43A was indirectly imposing an an "ISO Tax" on Indian corporate entities.
It was pointed out that the guideline which was proposed to be a rule under
the statutory Act (ITA 2008) contained a provision which made ISO 27001
audit mandatory for all IT users to follow the prescription of
"Reasonable Security Practice" as envisaged as a responsibility under
It was also pointed out that
a) ISO 27001 is a proprietary framework not
available in public domain except at a cost of around US $160.(
approx Rs 7000). This meant that whoever wanted to know what the law
in relation to Section 43A is, should buy a copy of the official
version of the specifications involving an outgo of foreign
exchange. Since referring to the specifications bought by some body
else would amount to copyright violation, every IT stake holder had
to buy an individual copy of the specification. Since there could be
upto 10 lakh IT stake holders in India ( there are as many
registered companies in India besides unaccounted number of website
owners who are also stakeholders under section 43A), a sum of around
Rs 700 crores would have to be invested by the Indian community just
to buy copies of the ISO 27001 specification.
b) If the average cost of conducting an ISO 27001
audit is around Rs 3- 5 lakhs, the total investment for the entire
community of 10 lakh stake holders to be compliant with law would be
a minimum of Rs 30000 crores. This audit needs to normally be
repeated once in 3 years and hence would be a recurring cost for the
c) At present there are not the required number
of ISO auditors who can conduct ISO audits for even 10000 clients in
a pace of two or three years. Hence the introduction of the rule
would only create non compliant community and does not add to the
d) It was also pointed out that ISO 27001 audit
has not proved to be a panacea for security ills. In fact India is
facing Cyber Crimes and insider frauds just like other countries
despite many companies having already adopted ISO 27001 audits. One
glance at the Indian Banking scenario indicates that ISO audit
doesnot guarantee even a minimum standard of security to prevent
Phishing and other frauds. The need to make such an audit mandatory
and provide a national approval through a statute was therefore
pointed out as highly improper.
e) The need to adopt an Indigenous information
security framework which was in the public domain was therefore
In view of the above the following clauses in the
proposed rules were objected.:
7. Reasonable Security Practices and
Procedures.— (1) Any person, including a body corporate shall be
considered to have complied with reasonable security practices and
procedures, if they have implemented such security practices and
standards which shall require a comprehensive documented information
security programme and information security policies that contain
managerial, technical, operational and physical security control
measures that are commensurate with the information assets being
protected. In the event of an information security breach, any such
person, including the body corporate shall be required to
demonstrate, as and when called upon to do so by the agency mandated
under the law, that they have implemented security control measures
as per their documented information security programme and
information security policies.
(2) The International Standard IS/ISO/IEC 27001 on "Information
Technology - Security Techniques - Information Security Management
System - Requirements" has been adopted by the country. The security
practices prescribed by this standard are enshrined in the principle
outlined in sub-rule (1).
(3) Industry associations or industry cluster who are following
other than IS/ISO/IEC 27001 codes of best practices for data
protection and fulfil the requirement of sub- rule (1), shall get
their codes of best practices approved by the government, which
shall be duly notified.
(4) The body corporate who have implemented either IS/ISO/IEC 27001
standard or the codes of best practices for data protection as
approved under sub-rule (3) shall be deemed to have complied with
reasonable security practices and procedures.
The specific objections were
a) to declare ISO 27001 as having been "adopted
by the country" since this was getting enshrined as a certificate
from the Indian Parliament through the notification.
b) To make the existing guidelines of different
organizations including information security guidelines issued by
SEBI and RBI subordinate to ISO 27001 as requiring a due
c) To consider all existing ISO audited entities
automatically compliant with Sec 43A requirements.
In view of the issues involved, an RTI application
was sent to the MCIT to understand why the department was interested in
recommending a practice which is known to be deficient in practice and
would cost enormous money for compliance.
The RTI application sought the following information:
recommending that “The body corporate who have implemented either
IS/ISO/IEC 27001 standard or the codes of best practices for data
protection as approved under sub-rule (3) shall be deemed to have
complied with reasonable security practices and procedures” as part of
the draft notification “Information Technology (Reasonable security
practices and procedures and sensitive personal information) Rules,
2011” (regarding Section 43A of Information Technology Act 2000),
information on the estimated impact of the notification that has
been taken into consideration while arriving at the recommendation such
How many body corporates as defined in Information Technology
Act 2000/2008 in India have so far adopted IS/ISO/IEC 27001 standard?
If the draft notification is brought into force, how many body
corporates (which includes a firm, sole proprietorship or other
association of individuals engaged in commercial or professional
activities) in India are estimated to adopt the said standard in the
next 3 years?
What is the estimated cost of all the stakeholders obtaining
an official copy of the standard documentation?
What is the estimated cost of all the stakeholders obtaining
an audit certificate under the said standards?
What is the estimated number of auditors available in India
for conducting such audits and the estimated time required if all the
stakeholders do consider adopting the standards?
What is the ownership of the organization which manages the
said standards and is there any revenue inflow to the Government of
India on account of stakeholders adopting the said standards?
What is the total estimated cost of all stakeholders getting
themselves certified for the recommended standards?
Were any other information security standards also considered
for adoption and rejected in preference for the said standard and if so
what were the considerations for which the said standards were
if such information has not been taken into consideration, what other
criteria has been used to arrive at the recommendation.
A reply was received from the department on 25th
March 2011 which stated :
a) 516 organizations have so far obtained ISO
27001 certification in the country as per details published on the
b) to h). This department does not have
information related to these points.
It is significant to note that the department admits
that it does not know what would be the financial impact of the cost of
implementing the rules to be notified by the department. Since the
article of Naavi was in public domain, the department was aware that
there was on school of thought which thought that there was a financial
outgo of Rs 700 crores on the Indian community to just understand what
the law is and this was considered as "ISO Tax" and also that the rule
would result in a financial benefit of Rs 30000 crores for every three
years (or Rs 10000 crores per year) to the ISO 27001 community at the
cost of IT stake holders.
It was imperative for the department to have
considered these thoughts and evaluated their proposal. The RTI reply
does not indicate if any such exercise was undertaken.
In the revised
notification now issued on April 11, the words "ISO 27001 has been
adopted by the country" has been removed. But the recognition that
companies which have conducted ISO 27001 audit will be deemed to have
complied with ISO 27001 remains with an addition that the audit should
Now in the finalized rules
therefore, it appears that the department is pushing this ISO levy of Rs
700 crores and commercial benefit of Rs 30000 crores per annum to the
The sequence of events
donot provide the confidence to the citizens of this country that the
decision taken by the MCIT in framing the rules under Section 43A are
based on proper evaluation of its consequences and there is a primafacie
doubt if the decision was influenced by the ISO 27001 lobby for serving
their vested interests.
I therefore urge the department to withdraw the
notification failing which I urge the CVC and the CAG to examine if the
decision is not influenced by any non professional considerations.
April 30, 2011
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