DPDP Act 2023 Compliance Guide for MSMEs: Simple Steps to Win Trust
Why This Matters
If you run a small or mid-sized business, you’re already handling personal data every day — names, phone numbers, addresses, payment details, maybe even Aadhaar or PAN.
With the Digital Personal Data Protection (DPDP) Act, 2023, protecting this information is now not just good practice, but a legal duty. The penalties for non-compliance can go up to ₹250 crore. But more importantly, data protection builds trust — and trust is currency in today’s digital economy.
The good news? You don’t need an expensive setup to get started. Here’s a simple DPDP compliance checklist for MSMEs.
What is the DPDP Act, 2023 in Simple Words?
The DPDP Act is India’s new data privacy law that applies to businesses of all sizes — including MSMEs and startups. It requires businesses to collect, store, and use personal data responsibly. In short, you must:
- Take clear consent from customers.
- Use data only for the purpose promised.
- Protect and delete data when no longer needed.
Practical DPDP Compliance Tasks for MSMEs
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Know What Data You Collect
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Make a list of the personal data you handle: customer contacts, employee records, payment details.
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Ask: Do I really need all this? If not, stop collecting the extra.
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Take Consent Clearly
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No hidden boxes or vague terms.
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If you’re using customer numbers for WhatsApp updates or marketing, say it upfront and let them agree.
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Use Data Only for the Purpose You Promised
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If a customer shared their email for billing, don’t use it for promotions unless they agreed.
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Protect Data with Basic Security
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Use strong passwords and two-factor authentication.
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Store files securely (avoid unprotected spreadsheets lying on laptops).
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Train even a small team not to share data carelessly.
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Delete When Not Needed
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Don’t keep customer data forever “just in case.”
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Have a simple policy — for example, delete customer KYC records 3 years after closing the account.
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Be Careful with Third Parties
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If you use payment gateways, CRMs, or cloud storage, check if they are DPDP-compliant.
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Add clauses in vendor contracts to protect data.
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Give Customers a Way to Complain
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Even a simple email ID for “data concerns” shows you are serious.
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Acknowledge complaints and resolve them quickly.
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Common Mistakes to Avoid
- Collecting Aadhaar/PAN without a valid reason.
- Sharing customer numbers casually with sales teams or vendors.
- Using data for one purpose (like delivery) but reusing it for another (like marketing) without consent.
- Keeping old customer data forever — a huge risk if a breach happens.
Turning Compliance Into an Advantage
For MSMEs, DPDP compliance isn’t just about avoiding fines. It can actually:
- Build customer trust (“we respect your privacy”).
- Open B2B opportunities with larger companies who demand compliant vendors.
- Set you apart from competitors who ignore data protection.
Q1. Who does the DPDP Act, 2023 apply to?
It applies to all businesses in India — from large corporations to startups and MSMEs — that handle personal data of customers, employees, or vendors.
Q2. What are the penalties for MSMEs under DPDP Act?
Penalties can go up to ₹250 crore depending on the severity of non-compliance, especially in cases of data breaches or failure to protect sensitive information.
Q3. How can MSMEs comply without high costs?
By starting small: clear consent forms, secure storage (even Google Drive with 2FA), data deletion policies, and basic employee training.
Q4. Is Aadhaar collection always required?
No. Only collect Aadhaar, PAN, or other sensitive IDs if it’s legally necessary (like KYC for regulated industries).
Final Word
The DPDP Act may sound big, but at its heart it asks businesses to do three things: be clear, be careful, be respectful with personal data.
For MSMEs, starting small — with consent forms, secure storage, and data clean-up — is enough to stay compliant and build a culture of trust. Over time, this isn’t just about following the law — it’s about future-proofing your business.
Want a customized DPDP compliance checklist for your business? Write to us at team@thetla.in to get one.
Turning Compliance Into an Advantage
For MSMEs, DPDP compliance isn’t just about avoiding fines. It can actually:
-
Build customer trust (“we respect your privacy”).
-
Open B2B opportunities with larger companies who demand compliant vendors.
-
Set you apart from competitors who ignore data protection.
Final Word
The DPDP Act may sound big, but at its heart it asks businesses to do three things: be clear, be careful, be respectful with personal data.
For MSMEs, starting small — with consent forms, secure storage, and data clean-up — is enough to stay compliant and build a culture of trust. Over time, this isn’t just about following the law — it’s about future-proofing your business.