Artificial Intelligence (AI) has become an increasingly strategic tool for influencing a country’s geopolitical position on the global stage. India is the world’s fastest-growing major digital economy and the third-largest AI talent hub. It is at the crossroads of positioning itself between realizing its importance in AI governance and shaping the future landscape by encouraging AI innovations. The Digital Personal Data Protection Act (DPDPA, 2023) laid the foundation of AI regulations. This legislation signals New Delhi’s intention to focus on developing AI safety frameworks to minimize the risks of its excessive and unethical usage. The term used in the legislation, ‘responsible and inclusive AI’, has clarified that the purpose of India’s AI regulation is not only to reduce the associated risks, but also to promote AI-built innovation systems.

On the contrary, the European Union has approved the first comprehensive AI legislation- the EU Artificial Intelligence Act, which imposes partial or total bans on high-risk AI systems and stricter enforcement penalties. The United Kingdom is somehow in the middle, struggling between creating a regulatory environment while keeping intact the innovation-friendly ecosystem of AI. The recently signed FTA between India and the UK has reinforced the need for AI governance, especially in terms of regulating deepfakes and AI-driven misinformation. In this context, the article will discuss where India’s regulatory frameworks can fit within the EU and the UK’s AI governance models, without compromising its AI innovation ecosystem.

India’s AI Regulatory Framework

India’s AI regulatory framework has three major pillars: innovation, inclusion and digital sovereignty. Unlike the EU, India has emphasized a risk-based and innovation-first model, which does not limit the usage of AI, but appropriately recognized the AI’s developmental potential across different sectors, such as agriculture, health, public services, and financial inclusion. India’s digital public infrastructure, like Aadhaar inclusivity, UPI, or mandates under DigiLocker, has already proven India’s future readiness in terms of technological empowerment. There are 12 billion monthly digital transactions through UPI, which is a pathbreaking record for setting the future track on creating a digital ecosystem.

New Delhi is cautious in selecting its approach towards AI regulation. EU’s strictlegislation has already been cited as the major reason for significantly reducing the investment through venture capital in EU startups by 10%, which is in reverse trend in India. Investors are increasingly choosing AI startups due to the potential for driving AI-led innovation in India. On one hand, India is learning from AI regulation framework worldwide, but also understands AI as the strategic pathway for achieving economic growth, on the other hand. In simple terms, India’s data and AI governance is innovation-shielded and market-supportive with a focus on reducing the unethical use of AI and establishing its digital sovereignty.

EU AI Act vs the UK’s AI regulation

The regulatory frameworks of the EU and the UK are very different. The EU’s model of AI regulation is based on hard governance factors, where the AI act of the EU has banned all high-risk based certain applications and also has mandated extensive testing for all the high-risk AI models. In Article 99 of the AI Act, the EU imposed fines of 35 million EUR or 7% of the company’s annual turnover in case of non-compliance with AI practices within the defined frameworks. While this act aims to utilize the ethical use of AI to drive innovation, this act has become a barrier to attracting the required investment in AI startups.

In contrast, the UK’s model is agile and soft, and a principle-based framework. The AI White Paper of 2023 , published by the UK government, is not to regulate the AI-led creativity, but to fix the risk standards and implement them to create a better innovation environment. At the AI Safety Summit, the former Prime Minister of the UK, Rishi Sunak, highlighted that the UK’s ambition is to regulate AI, but without compromising the potential of AI-led innovation. The UK’s regulations are not strict, but aim to attract investment and talent, which can potentially position the UK as the hub for AI labs and testing facilities with ethical usage.

India is somewhere between the EU and the UK

India has the third regulatory way- it aims to regulate AI while capturing the potential of AI-led innovation.India’s approach, on one hand, inclines more with the UK’s innovation-friendly way, emphasizing sector-specific focus and co-regulation with the industry, but warns against the premature and ill-thought-out regulations that will obstruct the potential growth of India’s AI development. India’s AI market is expected to reach nearly 39% by 2027, which is three times more than the current market. The IndiaAI initiative by MeitY has another framework, where New Delhi’s intention is clear to use AI for leveraging the small businesses.

In terms of aligning with the EU, India is already cooperating under the Trade and Technology Council (TTC) on AI standards, quantum computing, and other secure digital infrastructure. However, India and the EU’s AI regulations are at opposite poles. India’s leadership at the G20 and its crucial role in the Global Partnership on AI(GPAI) indicate New Delhi’s vision for the AI rulebook, which is inclusive to the Global South, also by inducting affordable and multilingual AI and the creation of inclusive data ecosystems. India is therefore on the path to create a third pole which is not matchable with the UK’s agile frameworks or with the EU’s strict standards.

Risks for India

India is largely attempting to maintain a balancing act between imposing the equal standards of the West and maintaining its digital sovereignty. The risks of India’s balance act may come while creating its global image in the AI industry, but without upgrading as per the global standards of AI regulation.

1. India cannot afford to import the stringent legislation like the EU, which will certainly slow India’s projected AI growth trajectory.

2. Additionally, the use of generative AI requires massive computing and cloud capabilities, on which imposing the EU-like stringent regulations can create a serious barrier in cross-border data and access to advanced computing resources through global hyperscalers. India’s AI regulation is broadly linked with the IndiaAI Mission to build sovereign AI capacity, where misalignment with some other standards can drastically slow the AI-driven startup growth.

3. In the domestic front, India produces 16% of the global AI talent pool , which is just second to the US. However, due to the structural challenges, bureaucratic fragmentation and lack of opportunities, retention talent is difficult.

4. In G20 and other such platforms, India always calls for an inclusive AI model, which is also applicable to the Global South’s demands. If India aligns its legislative principles with

Western governance, it will constrain India’s Global South commitment to curate an independent AI strategy.

Roadmap for Cooperation

While the recently signed India-UK FTA has prioritized the AI governance models, India should not copy but calibrate to pursue its strategic AI cooperation roadmap without compromising its autonomy.

Conclusion

India is currently at the crossroads of global AI divergence. The EU offers the hard reality behind extensive unethical usage of AI, while the UK does not restrict innovation through harsh regulations. However, India cannot wholly choose one of the foreign regulatory models. India’s AI regulations can emerge as the example of a third or alternative perspective of AI governance through democratic governance, which aims to bring digital inclusion, is committed to an innovation ecosystem and creates public goods by using AI. If New Delhi can implement this regulation, the approach can fully leverage the potential AI market growth while minimizing the risks that can position India as the future leader in AI, especially in the Global South.