As artificial intelligence reshapes everything from banking to healthcare, India is at a critical juncture. The national conversation is no longer about if AI should be regulated, but how to do it without stifling the country's booming tech sector.
From 'Light-Touch' to Structured Rules
For
years, India’s stance on AI was largely hands-off, favouring innovation over restraint. The government relied on existing laws like the Information Technology Act, 2000, and advisories to guide the industry. However, the rapid proliferation of generative AI and deepfakes has forced a strategic shift. In early October 2026, IT Minister Ashwini Vaishnaw announced that a formal consultation paper on AI regulation would be released soon, signalling a move toward a more structured 'techno-legal' framework. This new approach aims to combine technological safeguards with legal rules and places significant responsibility on the industry itself to manage risks related to cybersecurity, user safety, and misinformation.
What is a 'Risk-Based' Approach?
At the heart of the debate is the concept of a 'risk-based' or 'graded' regulatory system. This isn't a one-size-fits-all model. Instead, it would classify AI systems based on the level of risk they pose. For example, a low-risk application like a simple chatbot might face minimal regulation. In contrast, high-risk systems—those used in critical sectors like healthcare, finance, or autonomous vehicles—would face stringent requirements. These could include mandatory pre-deployment safety assessments, continuous monitoring, and clear disclosure to users that they are interacting with an AI system. This mirrors the approach taken by the European Union's AI Act, though India is keen to develop a framework tailored to its own unique ecosystem.
Testing in a 'Regulatory Sandbox'
To encourage innovation while ensuring safety, policymakers are considering the widespread use of 'regulatory sandboxes'. A sandbox is a controlled environment where companies can test new and novel AI applications on a limited scale without facing the full force of regulations immediately. This allows both developers and regulators to understand the real-world impact and potential harms of a new technology before it is released to the wider public. The IndiaAI Mission is already supporting several projects focused on safe and trusted AI, including methods for detecting bias, ensuring privacy, and assessing risks, which will inform these testing frameworks.
The Billion-Rupee Accountability Question
Perhaps the most complex piece of the puzzle is accountability. When an AI system makes a mistake—whether it's a biased hiring algorithm or a faulty medical diagnosis—who is responsible? Is it the developer who wrote the code, the company that deployed the system, or the user who acted on its recommendation? The emerging consensus in India points toward a system of 'graded liability' distributed across the AI value chain. This means accountability would be based on an actor's specific role and the level of risk involved. The government has also stressed that the primary responsibility for mitigating harms lies with the industry deployers, like banks and hospitals, where AI errors can have significant consequences.
Crafting India's Place in the Global AI Order
India's regulatory journey is not happening in a vacuum. Officials are carefully studying global models, from the EU’s comprehensive AI Act to the US’s more voluntary, industryled approach. The goal is to create a framework that cements India’s position as a leading AI power—one that fosters innovation while ensuring the technology is safe, trustworthy, and aligned with humancentric values. As recent statements from the Standing Committee on Information Technology confirm, issues like AI safety, deepfakes, and algorithmic bias are now top national priorities, with a formal legal framework expected to take shape following the upcoming public consultations.
