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India: AI regulation - current state and future perspectives

In this Insight article, Rahul Kapoor, Shokoh H. Yaghoubi, and Theresa T. Kalathil, from Morgan, Lewis & Bockius LLP, shed light on the intricate landscape of artificial intelligence (AI) regulation in India. As the nation grapples with the surge of AI technologies, their analysis unveils the current state, future trajectories, and global collaborations shaping India's approach towards responsible AI deployment.

© Philippe LEJEANVRE/Moment via Getty Images

AI presents big opportunities and potential risks for countries around the globe, and India is no exception. India has a vast, burgeoning, high-tech labor force. The country also attracts millions of dollars in foreign direct investments, putting it on pace to become a major player in the global technology supply chain. With this growth, AI technologies are and will find their way into numerous Indian industries, such as healthcare, technology, the workforce, and education, forcing the Indian Government to take steps toward regulating AI.

The US President, Joseph Biden, recently issued a sweeping Executive Order on AI and the representatives of the EU Council, European Parliament, and European Commission reached a compromise on an Artificial Intelligence Act (AI Act). Similar to these global counterparts, the Indian Government recognizes AI's potential to have a sweeping impact on society, including negative impacts such as bias and privacy violations. In the last several years, India has introduced initiatives and guidelines for the responsible development and deployment of AI technologies, but there are currently no specific laws regulating AI in India.

Defining principles and frameworks

The Indian Government tasked the NITI Aayog, its apex public policy think tank, with establishing guidelines and policies for the development and use of AI. In 2018, the NITI Aayog released the National Strategy for Artificial Intelligence #AIForAll strategy, which featured AI research and development guidelines focused on healthcare, agriculture, education, smart cities and infrastructure, and smart mobility and transformation. The strategy document states that ''India, being the fastest growing economy with the second largest population in the world, has a significant stake in the AI revolution." The aim of #AIforAll is to enhance and empower "human capabilities to address the challenges of access, affordability, shortage and inconsistency of skilled expertise, effective implementation of AI initiates to evolve scalable solutions for emerging economies; and endeavors to tackle some of the global challenges from AI's perspective, be it application, research, development, technology, or responsible AI." The strategy document recognizes that India has not pioneered AI technology, so India's approach to AI should be adapting and innovating AI technology for India's unique needs while building R&D capabilities to ensure competitiveness.

In February 2021, the NITI Aayog released Part 1 - Principles for Responsible AI, an approach paper that explores the various ethical considerations of deploying AI solutions in India, divided into system considerations and societal considerations. While the system considerations mostly deal with the overall principles behind decision-making, rightful inclusion of beneficiaries, and accountability of AI decisions, societal considerations focus on the impact of automation on job creation and employment.

In August 2021, the NITI Aayog released Part 2 - Operationalizing Principles for Responsible AI, which focuses on operationalizing principles for responsible AI. The report breaks down the actions that need to be taken by both the Government and the private sector, in partnership with research institutes, to cover regulatory and policy interventions, capacity building, incentivizing ethics by design, and creating frameworks for compliance with relevant AI standards.

The Ministry of Electronics and Information Technology (MeitY) has created committees on AI that have submitted reports on the development, safety, and ethical issues related to AI. MeitY also introduced the National Program on AI, called India AI, focusing on the foundation for AI innovation in India. The goal of the program is to provide guidance on AI development and deployment in India with a focus on providing the necessary skills to the Indian workforce for AI development, promoting AI research and development, and addressing ethical and regulatory concerns. MeitY has even launched various skill development programs to train professionals in AI-related technologies and applications. 

The Government also recently enacted a new privacy law, the Digital Personal Data Protection Act, 2023 (the Act), which it can leverage to address some of the privacy concerns concerning AI platforms.

Global Partnership on Artificial Intelligence and International Collaboration

Additionally, India is a member of the Global Partnership on Artificial Intelligence (GPAI). The 2023 GPAI Summit was recently held in New Delhi, where GPAI experts presented their work on responsible AI, data governance, and the future of work, innovation, and commercialization. The GPAI website provides that as a vital branch of the initiative, GPAI's experts produce deliverables that can be integrated into members' national strategies to ensure the inclusive and sustainable development of AI. Under the 2023 themes of climate change, global health, and societal resilience, experts worked to ensure that AI is used responsibly to address current challenges around the world. GPAI's members, on the other hand, adopted the 2023 Ministerial Declaration, reaffirming their commitment to the trustworthy stewardship of AI in line with the Organization for Economic Cooperation and Development (OECD) AI Principles, as well as their dedication to implementing those principles through the development of regulations, policies, standards, and other initiatives. In doing so, they highlighted efforts to bridge the gap between theory and practice and advance AI that is responsible, sustainable, and inclusive for all.

Other Indian agencies are also working on AI policies for the country to strengthen global partnerships on AI use and development. The Bureau of Indian Standards (BIS) has been developing standards and guidelines related to AI in India. BIS is the national standards body in India and it is proposing draft Indian standards for AI similar to the ISO Standards. ISO Standards are a set of international standards developed and published by the Organization for Standardization. The ISO standards are designed to ensure quality, safety, and efficiency in products, services, and systems across various industries and sectors worldwide. The purpose of the BIS standards for AI technologies is to promote interoperability, compatibility, and safety for AI. There are currently four AI-related standards on the BIS website that are open for public comment. These standards relate to information technology AI process management framework for big data analytics, information technology AI overview of computational approaches for AI systems, information technology governance of IT governance implications of the use of AI by organizations, and information technology AI overview of ethical and societal concerns. By collaborating with international standards organizations regarding the use and development of AI, India will be able to align its standards with global best practices in AI regulation.

While the Government has taken steps to regulate AI, its approach has mainly been one of pro-innovation with the development of policies and guidelines that acknowledge the ethical concerns and risks around the use of AI that may require the adoption of best practices. Given India's advantage of having a robust software development industry, this approach makes sense until the Government formally enacts AI regulations. Further, simply adopting the AI approaches of the EU or the US may not work for India as the country's culture, economy, and workforce differ from the US and the EU. Given that most fundamental AI development is happening in the US, it is understandable that the Indian Government would prioritize mobilizing its workforce for AI use and development and taking a risk-based approach instead of stifling innovation with broad regulations. There are so many unknowns and concerns around the use and development of AI from deepfakes to national security concerns that it may not be prudent to rush in with a comprehensive law that may quickly become outdated. Instead, India can task specific agencies with addressing the specific issues related to AI until it is ready to enact comprehensive regulation.

International opportunities

The AI landscape in India is continuously evolving. Uncertainty, however, has not stopped both local and international interest and growth in this space and we have seen international companies entering the Indian AI market.

An entity looking to enter the AI space in India should carefully consider the best legal route for such entry, whether through a joint venture, a strategic alliance, or a wholly owned subsidiary.1 Each route can be leveraged, and structures can be put in place depending on the level of investment and control required by the investing foreign entity. This is particularly important in a dynamic space like AI, where regulation is continuously evolving. Issues such as liability for harm caused and rights to intellectual property for AI systems have not been fully fleshed out in regulations. The enactment of the Act will have a significant impact on how personal data is processed. Therefore, entities looking to enter this space should carefully consider the best legal and contractual protections.

Rahul Kapoor Partner
[email protected]
Shokoh H. Yaghoubi Associate
[email protected]
Theresa T. Kalathil Associate
[email protected]
Morgan, Lewis & Bockius LLP., Silicon Valley and New York

1 For further details on this please see: India: Emerging As A Manufacturing Powerhouse