The Indian government has eased restrictions on Aadhaar authentication, allowing businesses to use the verification system to authenticate their customers. This decision marks a significant policy shift, despite privacy concerns and legal challenges. The new regulations, introduced under the Aadhaar Authentication for Good Governance (Social Welfare, Innovation, Knowledge) Amendment Rules, 2025, aim to broaden the scope of unique ID-based verification, which is managed by the Unique Identification Authority of India (UIDAI).
Notably, several major entities, including the National Informatics Center, National Health Agency, State Bank of India, Bank of Baroda, and Punjab National Bank, have been utilizing Aadhaar-based authentication extensively this month. These organizations leverage the system to verify their users' identities efficiently.
The Supreme Court had previously struck down Section 57 of the Aadhaar Act 2016 in 2018, which permitted private entities to use Aadhaar numbers for identity verification. However, critics argue that the new amendment attempts to "re-legislate" the struck-down section. Prasanna S, an advocate-on-record in the Supreme Court, remarked on the existing licensing regime since 2020 and expressed concerns about its reinforcement.
“Licensing regime existed even earlier under the 2020 rules. But now, with the access being expanded, the concern with the kind of a regime gets reinforced multifold” – Prasanna S
Entities seeking to enable Aadhaar authentication must apply for approval. The Ministry of Electronics and Information Technology (MeitY) and UIDAI will evaluate these applications. However, Kamesh Shekar highlighted the need for transparency in evaluating applications to prevent misuse.
“What criteria the MeitY and UIDAI would be taking into consideration for evaluating such applications have to be made clearer and more transparent to weed out misuse, which is a concern flagged by the Supreme Court while deliberating on Section 57 of the Aadhaar Act” – Kamesh Shekar
The Indian IT ministry has not disclosed responses to public consultations on this amendment, which started nearly two years ago. This lack of transparency adds to the growing privacy concerns surrounding the expansion of Aadhaar authentication. Sidharth Deb from The Quantum Hub warns that linking ID documentation to digital services could lead to exclusion.
“Once you start linking ID documentation or ID instruments to accessing digital services, there is always the risk of exclusion” – Sidharth Deb
Aadhaar authentication transactions surged to 129.93 billion in January, up from 109.13 billion in February last year, according to UIDAI's website. This increase illustrates the growing reliance on Aadhaar for identity verification across various sectors. While the new rules expand access to both public and private sectors, they have sparked debates about potential misuse and privacy implications.
The Indian government had amended the Aadhaar Act in 2019 to allow voluntary authentication using Aadhaar numbers. The current amendment further extends this scope, raising questions about data protection and privacy measures that New Delhi plans to implement.
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