As artificial intelligence (AI) becomes increasingly embedded in sectors like finance, healthcare, agriculture, and law enforcement, India is moving toward creating a comprehensive legal framework to regulate its use. In June 2025, the Ministry of Electronics and Information Technology (MeitY) unveiled a draft Artificial Intelligence Regulation Bill, signaling a decisive step to address the ethical, social, and economic challenges posed by AI systems.
The draft bill, currently open for public and expert consultation, outlines key provisions for transparency, data accountability, algorithmic fairness, and redressal mechanisms. With India rapidly emerging as a global tech hub, the legislation is seen as crucial to maintaining public trust and ensuring innovation aligns with human values.
Key Provisions of the Draft AI Bill
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Classification of AI Systems: The bill proposes categorizing AI systems into low-risk, moderate-risk, and high-risk based on their potential societal impact. Systems used in sectors like policing, banking, and recruitment would fall under the high-risk category and require stricter compliance.
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Mandatory Disclosure: Developers of AI tools must disclose if a user is interacting with an AI system and offer a clear explanation of the system’s functionality and decision-making logic, especially in high-risk use cases.
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Ethical Guidelines: All AI systems must adhere to principles such as non-discrimination, fairness, data minimization, and explainability. Any bias detected in machine learning models could attract penalties and suspension of services.
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Accountability Framework: Companies deploying AI must appoint an AI Ethics Officer and conduct regular audits to assess risks related to data use, algorithmic bias, and security vulnerabilities.
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Right to Appeal and Human Review: Citizens affected by an automated decision will have the right to request human review and appeal against outcomes they believe are incorrect or unfair.
Why Regulation Is Urgent
India currently has no specific law to regulate AI. With widespread deployment of facial recognition in public surveillance, algorithmic trading in stock markets, and AI in judiciary-related analytics, concerns are growing about misuse, bias, and lack of transparency.
Recent incidents, such as alleged biases in automated loan rejections and privacy violations in smart city surveillance projects, have underlined the need for regulatory guardrails.
Moreover, AI-generated misinformation and deepfakes have emerged as new threats during elections and public discourse. The bill proposes heavy penalties for platforms or individuals that deploy generative AI in malicious or manipulative ways without disclosure.
Industry and Civil Society Reactions
Tech giants like Google, Microsoft, and Indian unicorns such as Zoho and Infosys have welcomed the move but seek clarity on compliance timelines and cross-border data rules. Startups are concerned that over-regulation could stifle innovation.
Civil society organizations have praised the bill’s intent but argue that enforcement mechanisms must be strengthened and that marginalized communities should be consulted during policy finalization.
What’s Next?
The bill is expected to be tabled in Parliament during the Winter Session of 2025 after stakeholder consultations. India’s attempt to regulate AI balances between fostering innovation and protecting citizens’ rights—a challenge facing democracies around the world.