Amid the rapid expansion of artificial intelligence adoption across industries, the government is working on a structured legal and regulatory framework aimed at overseeing AI companies and ensuring accountable use of emerging technologies in India.
A newly formed high-level institutional body, the Artificial Intelligence Governance and Economic Group (AIGEG), is expected to drive the development of unified rules for AI developers, including companies building large language models, chatbots and other AI-driven systems. The framework is designed to define operational boundaries and compliance expectations for firms offering AI services in the country.
According to officials involved in the discussions, the proposed system will introduce regulatory sandboxes and clearer guidelines to ensure AI products and services operate within defined legal limits. The framework will apply to all AI companies operating in or serving the Indian market.
A senior official noted that while existing internet governance rules cover digital platforms, AI presents distinct risks and complexities. “While rules exist for internet company governance, AI presents a different set of challenges. Companies developing and offering AI tools must be held accountable and comply with domestic laws,” the official said.
Alongside regulation, the AIGEG is also expected to refine India’s broader AI strategy by prioritising investment in selected high-impact use cases expected to deliver measurable results within 12 to 18 months. Key focus areas are likely to include healthcare, agriculture and education.
The government is also preparing supporting measures for workforce adaptation, including large-scale reskilling and upskilling initiatives to manage potential job disruptions linked to AI deployment.
Officials said concerns around emerging AI capabilities, particularly large language models and advanced automation tools, have increased the urgency for coordinated governance. The proposed framework is expected to improve oversight, identify regulatory gaps and strengthen India’s response to fast-evolving AI technologies.
The initiative signals a shift toward more structured AI governance, balancing innovation with accountability, risk management and sector-wide compliance.
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