Mentor’s Comment: UPSC mains have always focused on the Fourth Industrial Revolution (Digital Revolution)  (2020) and the development of IT industries  (2021).

Despite a skilled workforce, Indian firms often lose AI deals due to capability gaps. In the intense AI race against Silicon Valley, China, and Southeast Asia, India must focus on fostering innovation and ensuring market regulations do not hinder its progress.

Today’s editorial talks about the AI-related challenges in India. This content would help in GS Paper 3 mains.

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Why in the News?

In Bengaluru, Indian developers face tough competition from China for AI projects. To lead the AI race, India must focus on supportive regulations and enhancing technological capabilities.

What are the key issues related to Artificial Intelligence (AI) in India?

• Job Displacement and Skill Gap: Increased AI adoption threatens to automate routine jobs, leading to large-scale unemployment and requiring a workforce with advanced digital skills. Example: The NASSCOM report (2023) highlighted that 69% of Indian tech workers need to upskill in AI and machine learning to remain employable as automation rises.
• Algorithmic Bias and Ethical Concerns: AI systems can reflect and amplify societal biases, leading to discriminatory outcomes in hiring, lending, and public services. Example: In 2023, the Union Public Service Commission (UPSC) faced criticism when its AI-based screening system allegedly disadvantaged candidates from marginalized backgrounds during preliminary evaluations.
• Misinformation and Deepfake Threats: AI-generated misinformation and deepfakes undermine public trust, pose security risks, and impact democratic processes. Example: During the 2024 Lok Sabha elections, deepfake videos impersonating political leaders circulated widely on social media, raising concerns about election manipulation.
• Regulatory Uncertainty and Compliance Costs: The lack of a unified AI policy and fragmented regulations create legal ambiguity, increasing compliance burdens for Indian startups. Example: In 2023, Indian app developers filed a complaint with the Competition Commission of India (CCI) against Google for restrictive AI-related practices on the Play Store, citing unfair competition.
• Global Competitiveness and Innovation Lag: Over-regulation and high compliance costs could hinder AI innovation, making India less competitive against global leaders like the U.S. and China. Example: India’s AI startup investments lag behind China and the U.S., with China attracting four times more AI funding in 2023, according to a Stanford AI Index report.

Where does India stand in the global Artificial Intelligence (AI) race?

• Emerging AI Hub with Growing Investments: India is positioning itself as an emerging AI hub with increasing investments in AI research and development, but it still lags behind global leaders like the U.S. and China. Example: According to the Stanford AI Index Report 2023, India ranked fifth globally in AI research output but attracted significantly less AI funding compared to China and the U.S.
• Government Initiatives to Boost AI Innovation: India has launched several initiatives to promote AI adoption, such as the “National Program on AI” and the establishment of AI research centers to enhance innovation and application. Example: In 2023, the Ministry of Electronics and Information Technology (MeitY) introduced the “IndiaAI” mission to promote AI-based solutions in healthcare, agriculture, and education.
• Challenges in Global Competitiveness: Despite having a large talent pool, India faces challenges in scaling AI innovation due to fragmented regulations, limited high-performance computing resources, and competition from advanced economies. Example: While India produced over 20,000 AI and machine learning professionals in 2023, its AI exports remain limited compared to China’s dominance in AI-driven hardware and cloud solutions.

What is the current regulatory framework for Artificial Intelligence (AI)?

• Existing Laws Governing AI Use: India does not have a dedicated AI law but regulates AI through existing legal frameworks like the Information Technology (IT) Act, 2000, which governs data protection, cybersecurity, and intermediary liability.
• Sector-Specific Guidelines: Various government bodies have issued guidelines for AI applications in specific sectors. For example: RBI Guidelines for AI in financial services (e.g., credit scoring) and Telecom Regulatory Authority of India (TRAI) recommendations on AI in data privacy and telecommunications.
• National Strategy on AI: The government launched the National Strategy for Artificial Intelligence (NITI Aayog, 2018) to guide AI research, ethical standards, and public-sector AI deployment. Example: Under the IndiaAI Mission (2023), the government aims to promote responsible AI use while fostering innovation across industries.
• Competition and Data Protection Framework: The Competition Commission of India (CCI) monitors anti-competitive practices by tech firms using AI algorithms. The Digital Personal Data Protection Act, 2023 regulates how AI systems process personal data. Example: In 2023, the CCI investigated Google for alleged AI-related anti-competitive practices on the Play Store.
• AI Ethics and Responsible Use: Guidelines on the ethical use of AI emphasize transparency, fairness, and accountability without imposing ex-ante (preemptive) regulation. Example: In 2023, the Ministry of Electronics and IT (MeitY) released advisory notes on preventing algorithmic bias and ensuring explainability in AI decisions.

Way forward: 

• Comprehensive AI Policy Framework: Establish a unified and adaptive AI policy focusing on ethical guidelines, data privacy, and accountability to balance innovation with public interest.
• Investment in AI Infrastructure and Skill Development: Enhance funding for AI research, expand high-performance computing resources, and implement large-scale reskilling programs to bridge the skill gap and improve global competitiveness.

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