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Artificial intelligence (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, make their way into numerous Indian industries, such as healthcare, technology, the workforce, and education, forcing the Indian government to take steps toward regulating AI.

In recent publications, we discussed US President Joseph Biden’s sweeping executive order on AI and the compromise reached on an AI act among representatives of the EU Council, European Parliament, and European Commission. 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.

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 government of India also recently enacted a new privacy law, the Digital Personal Data Protection Act in 2023, 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 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, including the Ministry of Electronics and Information Technology, which has created committees on AI that have submitted reports on the development, safety, and ethical issues related to AI. The Bureau of Indian Standards, which is the national standards body of India, has also established a committee on AI that is proposing draft Indian standards for AI.

While the government of India 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.

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. General Atomics Aeronautical Systems, Inc. announced a partnership with an India-based AI company, 114ai, to develop advanced technology for complex military systems. In September 2023, the US-based chip firm NVIDIA Corporation announced partnerships with Indian conglomerates Reliance Industries Ltd. and Tata group to develop cloud infrastructure and language models, wherein NVIDIA will provide the computing power required for building a cloud AI infrastructure platform.

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. 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, rights to intellectual property for AI systems, and privacy and data protection have not been fully fleshed out in regulations. Therefore, entities looking to enter this space should carefully consider the best legal and contractual protections.

How We Can Help

Morgan Lewis’s India initiative comprises more than 30 lawyers, several of whom are India qualified, and is led by lawyers from our Silicon Valley, Singapore, London, and Dubai offices. Collaborating across teams and offices, we advise our clients on a variety of business, regulatory, and governmental matters, from complex cross-border transactions and disputes to international tax planning and investment management. We also assist global companies with matters related to investments, expansion, and outsourcing as they enter into and further develop their business ventures in India. Contact the authors or any member of our India initiative for more information.