Navigating AI Regulations in India Balancing Innovation and Accountability

How can AI regulations in India balance innovation, accountability, and governance?

At the recent IGF Mumbai NXT25 conference, Harjeet S. Gulati, Group Chair & CEO of Cerebrent and a member of the IGF Leaders Circle, joined a distinguished panel of global thought leaders to tackle this pressing question shaping the future of AI policy in India.

India is poised to become a global AI powerhouse, thanks to a rapidly growing digital economy and a vast talent pool. But with the rise of artificial intelligence comes the critical challenge: how can India scale innovation while maintaining ethical standards, data privacy, and regulatory oversight? This tension is driving the ongoing conversation around Indian government AI regulation and governance.

India's AI ecosystem is expanding rapidly. According to NASSCOM, India's AI market is projected to reach $7.8 billion by 2025, growing at a 20.2%. From healthcare and finance to agriculture and manufacturing, AI is driving digital transformation across sectors.

But with innovation comes the need for control. Issues like AI bias, algorithmic opacity, and data misuse are sparking calls for artificial intelligence laws that promote AI ethics and compliance in India.

India’s AI Growth Metrics

Regulation is necessary to prevent AI misuse, but excessive oversight can hinder growth. The European Union’s AI Act categorizes AI applications into risk levels, imposing strict compliance for high-risk AI systems. While this ensures safety, some argue it slows down innovation.

India must craft an approach that:

• Encourages AI-driven startups without excessive compliance burdens
• Implements risk-based regulation, distinguishing between high-risk and low-risk AI applications
• Aligns AI policy in India with global standards while adapting them to India’s unique socio-economic context

Unlike the EU, India’s AI adoption is still in its nascent stage. Over-regulation could deter investment and slow down innovation. Instead, a phased, adaptive regulatory framework would allow India to regulate AI dynamically, based on its evolving impact.

As AI systems increasingly influence decisions that affect people’s lives—whether it’s approving a loan, diagnosing a patient, or managing traffic flow—the question of accountability isn’t just academic. It’s personal. Who’s responsible when an AI-driven process makes the wrong call? Is it the developer, the business, or the end-user?

To address these challenges, AI ethics and compliance in India must focus on three key aspects:

1. Transparency: AI models often function as "black boxes," meaning their decision-making processes are difficult to interpret. Ensuring Explainable AI (XAI) will allow regulators and users to understand AI-generated outcomes.
2. Liability Frameworks: Legal clarity is required to determine whether developers, businesses, or end-users are responsible for AI errors. Establishing liability will be crucial for sectors such as autonomous transportation and healthcare.
3. Bias and Fairness: AI systems are only as good as their training data. Implementing AI Ethics Boards to audit and mitigate biases will help prevent discrimination in hiring, lending, and governance.

India’s Digital Personal Data Protection Act (DPDP) 2023 provides a foundation for AI accountability, but stronger artificial intelligence laws are needed to enforce ethical AI development and deployment. As AI systems become more embedded in daily life, it’s critical to implement Indian AI governance policies that safeguard user rights without stifling innovation. Establishing clear guardrails now will help organizations build trust, mitigate risks, and harness the full potential of responsible AI in India. — Talk to an expert.

India isn’t starting from scratch on AI regulation. NITI Aayog’s Responsible AI for All strategy has laid the groundwork for ethical AI adoption. But let’s be honest, the regulatory roadmap is still a work in progress. For AI to truly thrive in India without tripping over ethical or legal landmines—our policymakers need to move fast, but also move smart.

India’s AI Regulatory Landscape

One way to get this right is by using regulatory sandboxes. Think of these as safe spaces where AI startups can test their ideas before rolling them out at scale. It's a win-win for startups, who get to innovate and also for policymakers, who learn what works (and what doesn't) before finalizing AI laws in India 2025.

But it’s not just about government oversight. We need public-private collaboration to make sure Indian government AI regulation isn’t written in a vacuum. When policymakers, technology leaders, and academics sit at the same table, we get rules that are practical, forward-looking, and aligned with global best practices—without holding back the very innovation we’re trying to encourage.

Incentives, like tax benefits and grants for companies that prioritize transparent AI solutions, further encourage responsible AI in India. Additionally, addressing concerns around AI-driven job displacement is critical. By investing in large-scale AI upskilling programs, India can ensure that its workforce is equipped with the necessary skills to thrive in an AI-driven economy, ensuring that technological advancements translate into employment opportunities rather than workforce redundancies.

A well-balanced AI policy in India will allow India to remain competitive in the global AI race and at the same time, also safeguard its citizens from unintended consequences. By integrating regulatory flexibility, industry collaboration, and workforce readiness, India can establish itself as a leader in ethical artificial intelligence laws.

India stands at a defining moment for AI governance. As the country builds its AI capabilities, it has a chance to lead by example—setting a global benchmark for responsible AI India rather than just chasing growth. Instead of copying regulations from elsewhere, India can shape a framework that fits its own social, economic, and cultural fabric.

One practical step? Ethical AI certification. Imagine a system where businesses have to prove that their AI models meet basic standards of fairness and transparency before going live. It’s not about adding red tape; it’s about building trust with customers, regulators, and partners alike under a shared vision of AI ethics and compliance in India.

And let’s not forget the bigger picture: AI isn’t just about chatbots and automation. It’s a tool for social good. From making healthcare more accessible to transforming agriculture with precision farming, AI has the power to lift millions — but only if AI regulations in India provide the right guardrails.

AI is India’s next big frontier—but let’s be honest, it’s not just about tech. It’s about trust, accountability, and how we make sure AI serves people, not the other way around.

With the right balance of forward-thinking AI laws in India 2025 and accountability mechanisms, India can build an AI ecosystem that delivers real economic value, without sacrificing ethics or public trust.

But here’s the thing: the future of AI policy in India won’t be decided by any one company or government department. It’ll take all of us—policymakers, tech leaders, educators, and citizens—working together to shape a regulation of artificial intelligence in India that fuels innovation while protecting the people who depend on it. The time to act is now.

Your AI journey deserves a trusted partner. From governance frameworks to real-world implementation, Millipixels is here to help you navigate the AI landscape—responsibly and effectively. Connect to an expert now.

1. What is the government scheme for AI in India?

The Indian government has introduced several initiatives to promote artificial intelligence. A key scheme is NITI Aayog’s “Responsible AI for All” strategy, which forms the backbone of Indian government AI regulation. It aims to ensure ethical development, widespread adoption, and responsible deployment of AI technologies across sectors.

2. What is the AI advisory in India?

India has set up advisory bodies and task forces to shape its AI policy. These include expert committees under NITI Aayog and the Ministry of Electronics and Information Technology (MeitY), which provide inputs on AI governance frameworks, data protection, and the regulation of artificial intelligence in India. These advisories help align India’s AI growth with ethical and legal standards.

3. What is the draft AI Act in India?

While India hasn’t passed a dedicated AI law yet, work is underway to develop a comprehensive AI policy in India. Drawing from global frameworks like the EU AI Act, India's draft aims to set rules for high-risk AI systems, promote AI ethics and compliance in India, and support innovation through regulatory sandboxes and adaptive policies.

4. What are the legal ethics of AI?

Legal ethics around AI include transparency, fairness, non-discrimination, accountability, and data privacy. These principles form the core of artificial intelligence laws being developed globally and in India. India's approach to AI ethics and compliance includes building explainable AI models, clear liability frameworks, and ethics boards for high-risk sectors.

5. How does AI affect compliance?

AI affects compliance by introducing new challenges and opportunities. While AI can streamline regulatory tasks like monitoring and auditing, it also raises concerns around data privacy, algorithmic bias, and accountability. Therefore, AI regulations in India must adapt to ensure that compliance frameworks evolve alongside technological growth.

6. What is the India initiative for Artificial Intelligence?

India’s key initiative for AI is the National AI Strategy by NITI Aayog, also known as “#AIforAll.” It lays the foundation for Indian AI governance and promotes inclusive growth through AI in healthcare, education, agriculture, and smart cities. The initiative also supports the development of responsible AI in India through ethical and scalable innovation.

7. Will AI laws in India 2025 be different from global standards?

Yes, while India will align its framework with international best practices, its AI laws in India 2025 will be tailored to the country’s socio-economic realities. India aims to strike a balance between encouraging innovation and ensuring accountability through customized, risk-based AI regulations.