Projections indicate that India’s AI market is anticipated to surge at a pace of 25-35% CAGR, up to 2027, with considerable uptake in key sectors such as healthcare, agriculture, education, and governance. BFSI, Retail, and Healthcare emerged as the frontrunners in AI adoption levels as follows: BFSI-35%, Retail-30%, and Healthcare-28%. Compared to global leaders such as the United States (AI adoption-50%) and China (AI adoption-45%), India is promising but is still at a developing stage. However, AI spending in the region is expected to witness a whopping change wherein Asia-Pacific will account for up to $90.7 billion by 2027, including India.Recent Policy Developments

In order to strengthen the establishment and growth of an AI ecosystem in India, the government has articulated several pivotal policies and initiatives. Foremost among which is the Data Personal Data Protection (DPDP) Act which provides a comprehensive framework for privacy of data while supporting AI innovation. Another major measure is the Responsible AI Principles of NITI Aayog, which to ensure fairness, transparency, and accountability in AI. Other previous initiatives, including the National AI Strategy and its operationalization in 2021, also support AI adoption in critical sectors.The advisory on AI and Large Language Models as of March 2024, contains ethical guidelines in developing and deploying AI models. Participating in several international forums, such as GPAI (Global Partnership on Artificial Intelligence) and the ongoing G20 discussions on AI governance, also showcase India’s efforts to align itself with global best practices. The 2023 GPAI Summit in New Delhi marked the leadership that India is manifesting in AI governance and collaboration.

Ethical and Responsible AI

The Indian government has always tried to ensure that excitement about AI is tempered by regulation because it is vital to mitigate risks inherent in the technologies, including biased data, misrepresentation of facts, and privacy issues. The initiatives include sandboxing, in which controlled environments are set up to provide opportunities for responsible testing of AI solutions and innovation hubs that bring the government and private actors together in creating conditions for fruitful collaboration toward AI research and development activities. Another major approach to increasing AI penetration is collaborative government-industry investment.

In India, the concept of ethical AI is based on the notions of justice, inclusion, and soundness in its proceeding. The Responsible AI Principles of the NITI Aayog will lay the framework for AI system deliveries that are unbiased and fair, transparent and explainable, and most importantly accountable and auditable. These principles have provisions for all AI solution approaches to be inclusive-very vital in its context as it will not leave any section of society behind.

This also signifies India’s engagement in the GPAI, demonstrating India’s concentration on issues related to data governance, ethics surrounding AI, and the future of work. India is working toward harmonization with global regulatory standards into its policy framework around issues pertaining to local challenges using GPAI and forums like G20.

Impact of Policy Shifts on Industry and Startups

Most of the policies that have been promulgated so far have very significant impacts on the businesses, especially the start-ups in the AI ecosystem. The announcement of more than ₹10,000 crore towards the India AI Mission is for enabling innovations by AI on compute capacity, AI skills, and infrastructure Incentives and grants, along with tax benefits, are expected to further promote entrepreneurship in AI. According to a few predictions, AI infrastructure spending is expected to grow at a Global CAGR of 13.1% and could reach $733 million by 2027, paving the way for disruptive AI use cases.

Moreover, India’s regulatory landscape prioritizes data localization to ensure data sovereignty for national security and privacy. Privacy laws like the DPDP Act address concerns about data misuse while fostering trust in AI systems. Anonymization promotes safe AI training and research while respecting user privacy. However, challenges remain in ensuring the availability of high-quality data for AI systems, which is critical for innovation.

Challenges and Gaps

India has made commendable strides; yet, it faces challenges in enforcing regulations for AI. Such challenges include the blurred jurisdictions and contradictory guidelines, as well as the bridging of technological readiness-the crucial foundation for linking AI innovation to industry. For effective execution of policies related to AI, building the capacity of regulators with regard to AI upskilling, and creating specialized AI committees, etc., are some initiatives that can be taken.

Future Trends

Much of the changes that will soon occur in India’s AI regulatory landscape will be inevitable. Specific policies are expected to be framed for different sectors such as healthcare, BFSI, manufacturing, etc. It is also likely that intellectual property laws, in regard to the ownership and accountability of AI-generated content, will come into the picture. Most of the autonomous systems’ regulations will deal with accountability mechanisms toward safety and reliability. Under all these facets-from demographic strengths to growing digital infrastructure and even the proactive initiatives taken by the Government of India can one day stand out of others as a leader in AI within the emerging markets.

Furthermore, to tap the promised potential of AI, it will take cooperation between policy makers, industry, academia, and civil society to pursue an effective regulatory environment for innovation and ethical AI development. India is now at a turning point in its history where it can make a real difference across healthcare, manufacturing, and BFSI with the emerging technologies. And for India to contribute to this competitiveness with the rest of the world, the focus should include AI skills, infrastructure, and governance.

The author is Sandeep Agarwal, India MD & Global CTO, Visionet Systems

Disclaimer: The views expressed are solely of the author and ETCISO does not necessarily subscribe to it. ETCISO shall not be responsible for any damage caused to any person/organization directly or indirectly.