Introduction
Artificial Intelligence ("AI") is developing at a rapid pace, which has spurred discussion on the need for comprehensive rules to both harness AI's potential and reduce its risks. While the European Union ("EU") has taken a pioneering step with the AI Act1 ("AI Act"), India is still crafting its approach to AI governance. The proposed Digital India Act2, expected to replace the nearly 25-year-old IT Act, is likely to regulate AI, among other things.
The EU AI Act: A Comprehensive Regulatory Framework
The EU AI Act, passed in May 2024, is the first comprehensive legal framework regulating AI, establishing common rules within the EU. It classifies AI systems by risk level (unacceptable, high, limited, minimal) and imposes stricter requirements on high-risk applications. The Act regulates AI systems entering the EU market and requires member states to establish bodies for conformity assessments.
The Act aims to foster trustworthy AI in Europe by ensuring respect for fundamental rights, safety, and ethics. It also creates the European AI Board to encourage cooperation and ensure compliance.
India's Approach to AI Regulation
India has taken significant steps towards regulating AI through various initiatives and advisories. The Ministry of Electronics and Information Technology ("MeitY") has issued advisories to intermediaries and platforms developing AI tools for Indian users, urging compliance with additional requirements under the Information Technology Rules, 20213. These advisories address concerns such as deepfakes, misinformation, and the responsible use of AI models and large language models (LLMs). Notably, a March 2024 advisory4 recommends that platforms ensure their AI tools comply with content regulations, avoid bias or discrimination, label potential unreliability of AI-generated content, and implement mechanisms to identify the source of synthetic content. While these advisories lack legislative backing, they represent the government's efforts to collaborate with the private sector in addressing AI-related concerns. Additionally, the recently enacted Digital Personal Data Protection Act, 20235 indirectly impacts AI development by imposing obligations on data fiduciaries, including significant penalties for data breaches and specific consent requirements for processing personal data.
The Indian government has also undertaken broader initiatives to foster responsible AI development. The National Strategy for AI (#AIforAll), launched in 2018 by NITI Aayog, focuses on leveraging AI for social and inclusive growth across key sectors such as healthcare, agriculture, and education6. NITI Aayog further published principles for responsible AI practices in 2021, emphasising the importance of safe, reliable, fair, and inclusive AI systems7. The Ministry of Commerce and Industry's Task Force on AI has highlighted the need for explainable AI behaviour, engineering for safety and security, and compliance with industrial standards8. Furthermore, the draft National Data Governance Framework Policy aims to maximise data-led governance and innovation, proposing the establishment of a Data Management Office to oversee data access and management9. The recent IndiaAI 2023 Expert Group Report by MeitY outlines comprehensive strategies for leveraging AI, including recommendations for enhancing AI skill penetration and strengthening AI computer infrastructure through public-private partnerships10. These initiatives collectively demonstrate India's commitment to fostering AI innovation while addressing ethical considerations and potential risks associated with the technology.
Compliance Costs and Challenges
The AI Act will increase compliance costs and regulatory burdens for Indian companies serving the EU market, especially smaller firms. These companies will need to adjust their AI systems to meet the prescribed standards, undergo conformity assessments, and implement risk management measures if their AI systems fall into the higher risk categories.
To mitigate the burden on startups and small and medium enterprises, the AI Act allows sufficient time for compliance (fully applicable 24 months after entry into force) and contemplates measures such as regulatory sandboxes, training initiatives, and reduced fees for certain assessments. However, Indian startups serving the EU market will need to tread cautiously when deploying AI that does not fall within the general-purpose open-source exceptions in the AI Act.
Fostering Innovation and Harmonisation
While the AI Act aims to ensure trustworthy AI, it also recognises the need to foster innovation through regulatory sandboxes. India's regulatory framework should similarly balance innovation and regulation, allowing for periodic reviews to address emerging challenges.
There are calls for a certain level of harmonisation with international frameworks to avoid confusion and incremental costs for Indian startups expanding globally. However, India's regulations must be tailored to its unique context while drawing lessons from global developments like the AI Act.
Conclusion
The AI Act sets a precedent for international AI governance. As India develops its regulations, it must balance innovation and risk mitigation. A flexible, adaptive approach can maximise AI's benefits while protecting rights. The EU's and India's regulatory efforts will shape AI's future, aligning it with societal benefit while safeguarding fundamental rights. International collaboration is key to avoiding fragmentation and ensuring responsible AI development globally.
Footnotes
1 Artificial Intelligence Act, European Parliament, available at: https://www.europarl.europa.eu/doceo/document/TA-9-2024-0138-FNL-COR01_EN.pdf.
2 Proposed Digital India Act, 2023, The Ministry of Electronics and Information Technology (MeitY), available at: https://www.meity.gov.in/writereaddata/files/DIA_Presentation%2009.03.2023%20Final.pdf.
3 The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, available at: https://www.meity.gov.in/writereaddata/files/Information%20Technology%20%28Intermediary%20Guidelines%20and%20Digital%20Media%20Ethics%20Code%29%20Rules%2C%202021%20%28updated%2006.04.2023%29-.pdf.
4 Due diligence by Intermediaries/Platforms under the Information Technology Act 2000 and Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021, available at: https://www.meity.gov.in/writereaddata/files/Advisory%2015March%202024.pdf.
5 Digital Personal Data Protection Act, 2023, Act No. 22 of 2023, available at: https://www.meity.gov.in/writereaddata/files/Digital%20Personal%20Data%20Protection%20Act%202023.pdf.
6 National Strategy for Artificial Intelligence, NITI Aayog, 2018, available at: https://www.niti.gov.in/sites/default/files/2023-03/National-Strategy-for-Artificial-Intelligence.pdf.
7 NITI Aayog Responsible AI Principles, February 2021, available at: https://www.niti.gov.in/sites/default/files/2021-02/Responsible-AI-22022021.pdf.
8 Task Force on Artificial Intelligence Report, Ministry of Commerce and Industry, available at: https://psa.gov.in/CMS/web/sites/default/files/publication/Report_of_Task_Force_on_ArtificialIntelligence_20March2018_2.pdf.
9 Draft National Data Governance Framework Policy, May 2022, available at: https://www.meity.gov.in/writereaddata/files/National-Data-Governance-Framework-Policy.pdf.
10 IndiaAI 2023 Expert Group Report, MeitY, October 2023, available at: https://www.meity.gov.in/writereaddata/files/IndiaAI-Expert-Group-Report-First-Edition.pdf.
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