Balancing innovation and regulation as AI spreads

Whether artificial intelligence (AI) is considered a disruptor or an accelerator, it is here to stay. After decades of being confined to laboratory-based research, AI has become mainstream and governments are becoming interested. India is no exception.

Estimates are that by 2035 AI will add USD1 trillion to India’s economy. Not surprisingly, the government would like to proactively develop a robust and effective ecosystem for AI innovation and implementation. It is exploring this through funding, facilitating, developing and regulating AI. For example, the IndiaAI mission received a significant INR10.37 trillion (USD12.41 billion) boost to create an AI computing infrastructure through a public-private partnership model. The government also intends to create domestic AI foundational models to serve local use cases in health, medical innovation, agriculture, education and governance.

This is not recent involvement. The government thinktank, Niti Aayog, was mandated to establish a national AI programme in the 2018-19 budget. Its steady stream of discussion papers since then shows how far the government’s vision for AI has evolved.

A 2018 paper on a “National Strategy for Artificial Intelligence” gave broad recommendations for developing an ecosystem for AI innovation and adoption, highlighting that the responsible use of AI was key. In February 2021, the concept of responsible AI was taken further. It examined associated risks and identified such regulatory principles as safety and reliability, inclusivity and non-discrimination, privacy and security. An August 2021 follow-up recommended a risk-based mechanism for regulation. It identified stakeholders and their responsibilities. For example, governments would design interventions and ensure accessibility; private sector and research institutions would incentivise ethics by design.

Other government entities are actively guiding public discourse on AI regulation. The Ministry of Electronics and Information (MEITy) set up committees to create a policy framework and develop the AI ecosystem. The Ministry of Commerce and Industry’s task force seeks to kick-start the use of AI for India’s economic transformation.

Although not directed at AI specifically, the newly enacted Digital Personal Data Protection Act, 2023, deals with the unauthorised processing and use of personal digital data. In March 2024, MEITy issued an advisory, although hurriedly revised, for the due diligence intermediaries and platforms connected with or testing or training AI tools have to follow. It provides that such tools can only be made available to users in India after labelling the potential unreliability of the generated output. Non-compliance brings penalties. The legality of such an advisory remains unclear, but the intention is clear. The trustworthiness, safety and reliability of AI cannot be compromised.

A draft regulatory framework for AI has been awaited for months, but with the Model Code of Conduct coming after the election, this will not be issued until at least mid-year. However, it is thought that the framework will focus on harnessing AI for economic growth; protecting citizens against misuse, and developing a talent pool.

India has been discussing through diplomacy the way in which AI can or should be regulated. The G20, of which India has the presidency, is calling for global governance of AI. The Global Partnership on Artificial Intelligence, of which the country is a member promotes responsible development and the use of AI. India is backing a UN draft resolution guaranteeing that AI technology is safe, secure, trustworthy and equally accessible.

These policy and legislative conversations will likely continue alongside the evolution of AI itself. That India does not yet have in place a formal legal or regulatory framework is perhaps an acknowledgement of the rapidly transforming nature of AI. There is concern that hasty decisions could overlook critical aspects. However, some foundational principles now appear to be in place. One is that regulation of AI must not stifle innovation, but must also prevent an unrestricted abuse of the technology. The government is firmly, but cautiously examining the best way forward, in partnership with key entities and bodies at home and abroad. Its regulatory decisions will be a touchstone for much of the world.

Essenese Obhan is the managing partner and Charul Yadav is a partner at Obhan & Associates.