The privacy landscape of India is getting reshaped with the Digital Personal Data Protection (DPDP) Act, where the IT and software companies must act fast to embed these data privacy laws into their processes and systems. One of the most important tools that will be required to achieve the same is the Data Protection Impact Assessment (DPIA).
DPIA is often looked at as a compliance checkbox; however, it’s our first line of defence against the DPDP penalties that regulators can put on us for compliance and reputational damage. In this blog, we shall understand what is DPIA, when it is required under the DPDP Act, and how to carry it out effectively in the organisation.
What is Data Protection Impact Assessment (DPIA)?
A Data Protection Impact Assessment (DPIA) is a structured assessment process for risk that has been designed to evaluate the impact of personal data processing activities on the privacy of individuals. It is required for organisations to analyse, identify, and minimise the risks associated with data privacy before any new product, process, or service is launched.
From a compliance point of view, DPIA is a type of privacy risk assessment that is essential under most data protection laws across the globe. The purpose of DPIA is to assess an organisation’s adherence to the overarching privacy principles along with the sectoral compliance requirements outlined as per the DPDP rules.
Also Read: Principles of Data Privacy and Protection Explained| Core Principles of DPDP
Why is DPIA Important for Indian Enterprises
As per the ‘Data Protection by Design”, a mandate of the DPDP act, DPIA is an important part of the compliance process. This helps in building trust with regulators and users. They are used to serve as accountability documents during audits.
Generally, enterprises need to conduct DPIA if the data processing is likely to result in a high risk to the freedom and rights of the data principals. However, how do we determine that? Some questions that enterprises can ask to understand whether a DPIA is needed or not are:
-
Is the data being processed at a large scale sensitive?
-
If new technologies being used that affect the privacy rights and responsibilities?
-
Whether the project involves automation, leading to legal issues?
These questions help to unravel the risk associated with the project and allow the enterprises to evaluate whether a DPIA is needed or not.
What Triggers DPIA Under the DPDP Act
While there is no specific format that is prescribed to DPIAs under the DPDP Act, all Significant Data Fiduciaries (SDFs) are required to conduct DPIA when:
-
Personal data on a large scale is being processed.
-
Cross-border data transfer
-
Processing that caters to vulnerable groups (such as the elderly, children)
-
Usage of the latest technologies, such as AI.
The Data Protection Board of India (DPB) recommends proactive DPIA adoption for all tech enterprises in India.
Also Read: Penalties Under DPDP: Fines, Breach Scenarios, and How to Reduce
How to Conduct DPIA for DPDP Compliance
-
Identification of Processing Activity
The scope for data processing needs to be clearly defined. Such as:
-
The purpose of data collection
-
The individuals who are getting affected.
-
The reason behind the data processing
-
How is the data being shared or stored?
-
-
Assess Proportionality and Necessity
The necessary questions that must be asked are:
-
How essential is the data collection for the business purpose?
-
Can the amount of personal data being used be minimised?
-
Are there any less intrusive or alternative methods?
-
-
Risk evaluation for Data Principals
This step is required to analyse the severity as well as the likelihood of:
-
Misuse of the personal data collected
-
Discrimination or harm done to individuals
-
Data breach or unauthorised access
-
-
Implementation of Risk Mitigation Measures
The technical and organisational safeguards must be defined. Such as:
-
Limits for data retention
-
Role-based access control (RBAC)
-
Encryption
-
Access Controls
-
Pseudonymisation or anonymisation
-
-
DPIA Documentation
Maintenance of detailed records of:
-
Approval logs
-
Chosen safeguards
-
Identified risks
-
Stakeholder feedback
-
How Privy by IDfy Helps in DPIA
As Indian organisations navigate through the strict requirements of the DPDP rules, conducting Data Protection Impact Assessments (DPIAs) has become extremely indispensable. Privy’s suite of platforms, including Inspect AI, Privy Consent Governance Platform (CGP), and Privy Consent Shield, collectively help in automation, scalability, and deep integration of the DPIA workflow for modern enterprises.
-
Privy’s Inspect AI for Automated DPIA
DPIA is instantly performed by Privy’s Inspect AI by analysing digital journeys, identification of personal data fields, detecting non-compliant statements in policies, mapping of processing purposes, generating RoPA, and risk assessments automatically. This ensures that issues are flagged even before the journey is live.
-
Evidence-backed DPIA with Consent Shield
Consent shield provides for tamper-proof and digitally signed consent artifacts, ensuring that enterprises have a verifiable proof of lawful processing, which is a core requirement of DPIA.
-
Governance-driven DPIA with CGP
DPIA is operationalised across enterprises by operationalising CGP by providing clear purpose -PII mappings, multilingual consent notice, RoPA automation, data processor management, as well as sectoral regulation alignment. This makes DPIA a continuous governance rather than a one-time task.
Also Read: Top DPDP Platforms & Privacy Automation Tools in India (2025 Comparison)
Conclusion
The data privacy space in India is seeing a new benchmark when it comes to the DPDP Act, and DPIAs play a major role in the implementation of this framework. Embedding of DPIAs in the product lifecycle not just ensures compliance but also operational resilience and customer trust.
Privy by IDfy is helping enterprises in India exactly solve this. Get in touch with us at shivani@idfy.com so we can help you become DPDP-compliant in no time. Also, keep an eye on this space for more articles on DPDP, privacy, and compliance.