India has clarified the applicability of its recently released privacy rules, causing a collective sigh of relief for outsourcing suppliers and customers around the globe. As detailed in our prior client alert on the topic, India released a set of rules earlier this year that would have radically impacted the manner in which outsourcing suppliers and customers dealt with personal data collected and processed in India. Indeed, the rules were nearly as expansive as the EU Data Directive and would have had a similar fundamental and profound impact on data practices for virtually every outsourcing relationship in which services were provided from India. On August 24, 2011, however, the Ministry of Communications & Information Technology clarified that the rules relating to collection, storage, dealing or handling of sensitive personal data or information under contractual obligation with any legal entity located within or outside India is not subject to Rules 4 and 5, which included many of the more controversial aspects of the previous guidance. This type of clarification had been anticipated by much of the industry since mid July or so and has been uniformly well received.