What the DPDP Act means for Indian businesses
The Digital Personal Data Protection (DPDP) Act is India’s new law to regulate how businesses collect and use personal information online. Passed in 2023, the law gives people greater control over their personal data and holds companies accountable for any misuse or negligence. Starting in late 2025, the government of India began issuing the first set of operational rules. The rollout is phased across three stages: Phase 1: November 2025 to May 2026; Phase 2: by November 2026; and Phase 3: by May 2027. Each phase activates additional compliance requirements instead of applying all rules at once.
The staged approach gives companies time to prepare. But it also raises the bar for operational proof by requiring transparent, documented governance and responsible data handling. This requires every team that touches personal information to record how it uses data and why. It means data protection isn’t just a tech concern anymore. Any team that works with documents like contracts must handle personal data responsibly, because mistakes in those documents can cause real legal and business trouble.
Are your business contracts DPDP-Compliant?
Many businesses don’t realize how closely their contracts impact compliance. Customer agreements, vendor onboarding forms, NDAs, and employment documents often carry personal information. These details include names, signatures, phone numbers, addresses, and other identifiers. From the moment they’re drafted, shared, reviewed, or stored, the document falls under DPDP rules.
The real risk comes from how a contract moves through a business. Drafts shared over email, offline edits without logs, and files stored in shared drives without access controls make it difficult to prove how personal data was handled. Even when the contract language is legally accurate, the steps involved in drafting, sharing, and storing it can still violate DPDP standards. Businesses must clearly show who accessed the information, the purpose behind that access, and when it was removed. Any missing proof creates gaps in data protection and raises concerns around data privacy in contract workflows.
Why do your contract workflows hold personal data, and where do they fail?
Personal data appears in contracts because you need to identify the people or businesses involved in the agreement clearly. The risk grows as that data moves through different stages of the contract lifecycle. During drafting, sales teams collect personal details from customers and vendors. When the document goes through reviews and approvals, legal, finance, and external partners access the same information. After signing, those details are stored, referenced, or reused for renewals and amendments.
Each step introduces new hands, deadlines, and working methods. A salesperson may add information informally during drafting, legal teams might exchange revised versions with outside counsel, and finance could reuse contract details for billing. If these interactions aren’t controlled, the personal data in the document keeps circulating without visibility into who touched it or why. As it moves between teams and systems, it becomes harder to maintain consistent safeguards. When contract workflows expand across departments like this, the risk to data privacy increases well before any legal issues arise.
How can businesses check contracts for DPDP, and where AI speeds it up?
A contract is truly compliant only when both its terms and its handling respect legal rights and DPDP requirements. Before approval, businesses should verify that any personal data in the document is collected for a legitimate purpose. They also need to know that every version of the contract can be traced and that access to drafts remains limited. Teams must confirm that this data can be updated or deleted upon the individual’s request. They also need to ensure it isn’t retained longer than necessary. Doing all of this manually for every agreement is slow, repetitive work that’s easy to miss.
AI can help by automatically reviewing contracts instead of relying solely on manual checks. With smartContract CLM, businesses can scan agreements to identify personal data fields. These spot clauses that require tighter consent or retention limits and flag risks related to third-party sharing or international data transfers. The platform keeps a reliable history of edits, comments, and approvals. Hence, teams have a clear record of how personal information was handled. This helps businesses address compliance issues earlier in the workflow, before a contract is even signed. By doing so, they protect both their operational efficiency and their data privacy.
Preparing for data protection compliance
As DPDP enforcement takes shape, businesses that prepare early can avoid rushed fixes, penalties, and the operational disruptions that come with reactive compliance. Contract management is now essential for compliance. Contracts are a common yet often overlooked source of personal data processing. AI-driven systems help teams monitor risk, standardize controls, and keep verifiable audit trails that protect data privacy. They also reduce compliance reliance on last-minute reviews, allowing businesses to build safeguards into their workflows rather than performing checks only at the end.
Being audit-ready shouldn’t be a one-time event. It needs to be a continuous habit across drafting, reviews, renewals, and storage. With smartContract CLM, businesses can manage agreements more efficiently and maintain the same compliance standards at every stage, ensuring operations run smoothly and responsibly. This gives legal, sales, finance, and vendor teams a consistent way to handle personal data without slowing down deal cycles or approvals.
As regulations tighten, proactive governance will be one of the strongest ways to protect customer trust, legal standing, and a long-term commitment to data protection. Businesses that build compliance into everyday contract work will operate with more confidence and be better prepared for whatever comes next.
