Ashwini Vaishnaw, the IT and electronics minister, announced the government's intent to engage the tech sector before imposing any data transfer limitations.
The government will also consult external experts to create a list of sectors where personal data transfers may be restricted.
This decision follows the introduction of draft rules under the Digital Personal Data Protection (DPDP) law adopted in 2023.
The proposal could cause friction with major tech companies, including Meta, Google, and Amazon, who may voice opposition to these measures.
The consultation process is open for feedback until February 18, with the government aiming to ensure robust discussions with stakeholders.