Mumbai: The government’s notification of the Digital Personal Data Protection Act (DPDPA) Rules 2025 marks a watershed moment for India’s digital economy. As with Europe’s GDPR in 2018, the new framework will rewrite how data is collected, processed, and monetised across the advertising, e-commerce, and ad-tech ecosystem.
According to Karan Taurani of Elara Capital, the transition could spark short-term disruption across digital advertising, but it also sets the stage for higher-quality conversions and structurally stronger data practices in the long run.
A New Consent-First Economy—and the Biggest Variable Ahead
Taurani notes that the single largest monitorable is whether apps will be legally required to offer full or partial access even when users deny consent.
“If apps must continue functioning despite a user denying consent, data signals may drop sharply. If they are allowed to restrict usage, friction rises—but the data ecosystem stays intact.”
Clarity on what qualifies as “necessary data” for app functioning, he adds, will shape the future of addressability, programmatic supply, and compliance intensity.
Short-Term Pain Possible—But Consumer Behaviour May Cushion the Blow
A GDPR-style contraction is possible if consent rates fall, Taurani warns. In Europe, publishers experienced a 20–30% drop in demand in the early months due to invalid or missing consent.
However, unlike developed markets, Taurani expects higher consent rates in emerging markets such as India: “The DPDP Act will hurt only if users don’t give consent. In India, consumers generally opt in—unlike the EU, where refusal rates are much higher.”
Even if consent drops initially, he predicts a quality-over-quantity transition, where fewer users but richer signals lead to better long-term conversion rates.
A Critical Risk: Ad Revenue Drives Profitability
For India’s e-commerce and Q-commerce players, Taurani argues that any slowdown in targeted advertising could meaningfully dent profitability: “Ad revenue contributes 40–120% of EBITDA for Q-commerce, Nykaa, and food-tech platforms. Any hit from DPDP compliance could severely impact profitability in the near term.”
Compliance Will Hit Smaller Ad-Tech Players Hardest
Smaller and fragmented ad-tech platforms—especially those dependent on third-party data—may face heavy turbulence.
“Fringe ad-tech players will see negative impact due to higher compliance costs, lower conversions, and reliance on third-party data. Over time, this benefits players like Affle, who already operate with consent-led datasets.”
With penalties of ₹250 crore per instance, Taurani expects heightened caution across the ecosystem, similar to the €5.7 billion in GDPR fines since 2018.
First-Party Data Is the New Competitive Moat
Taurani highlights that the DPDP Act fundamentally rewards platforms with deep first-party data ecosystems:
“Platforms like Amazon, Flipkart, Zomato, Nykaa or Paytm have richer, purchase-linked first-party datasets and are better positioned for a privacy-safe advertising future.”
Companies heavily dependent on third-party signals, he adds, will need to invest in consent provenance, data mapping, and governance, increasing operating costs.
18-Month Transition Period: The Real Test Begins Now
The government’s phased rollout gives companies 18 months to overhaul consent flows, retention policies, and governance systems.
Taurani notes, “Momentum of consent access or withdrawal will be a key monitorable. Directional clarity should emerge within eight to nine months as the ecosystem adjusts.”
Long-Term Outlook: Disruption First, Efficiency Later
Despite near-term pressures, Taurani remains structurally optimistic:
- Conversions will become more signal-dense
- High-consent inventory will command premium pricing
- Larger platforms gain advantage; long-tail players face consolidation
- Programmatic becomes cleaner, more transparent, and more compliant
In essence, the DPDP Act will compress the chaotic long tail of India’s ad-tech ecosystem while strengthening the compliance-ready leaders at the top.
Karan Taurani believes India is entering a new era of data governance, one that mirrors global privacy norms but is calibrated for India’s digital scale. While the transition may cause temporary pain for e-commerce and ad-tech players, it ultimately promises a more reliable, higher-quality, and transparent advertising ecosystem.
The next nine months, he stresses, will be critical in determining how deep—and how lasting—the disruptions will be.
