In 2024, India was at a critical crossroads encompassing the evolution of regulations and the exciting landscape of technological innovation. A significant incident involving a major IT firm’s AI-driven recruitment tool highlighted the nuances of this transition, as it faced accusations of gender bias for rejecting female applicants based on historical hiring patterns. In juxtaposition, Andhra Pradesh’s blockchain-based land registry system showcased the transformative power of technology, effectively digitizing over 1 million records and resulting in an impressive 80% reduction in property disputes. These contrasting scenarios illuminate India’s dual challenge of navigating the legal and ethical implications of cutting-edge technologies.
Regulation and Accountability in the Field of Artificial Intelligence
As India embraces AI across various sectors, including healthcare, finance, and governance, the market is projected to reach $14.72 billion by 2030. However, this rapid expansion is accompanied by significant accountability challenges:
National Strategy on Artificial Intelligence (NSAI): Launched by NITI Aayog, this initiative seeks to promote ethical AI practices within critical industries like agriculture and healthcare. A notable example is the collaboration between NITI Aayog and Microsoft in rural Maharashtra, where AI was deployed to detect diabetic retinopathy early. Yet, this initiative faced backlash after misdiagnoses were linked to biased training data, highlighting the urgent need for robust governance frameworks.
Digital Personal Data Protection Act (DPDP), 2023: Designed to protect user privacy, this law mandates explicit consent for data processing and imposes hefty penalties for breaches. A case emerging from Bengaluru in 2024 brought the DPDP to the forefront when a fintech company’s AI loan approval system was scrutinized for compliance gaps that led to data leaks, emphasizing the importance of safeguarding sensitive information.
Sector-Specific Guidelines:
Healthcare: The Indian Council of Medical Research (ICMR) now mandates that AI-generated diagnostic reports undergo human oversight, ensuring that technology serves as an aid rather than a standalone solution.
Finance: The Reserve Bank of India (RBI) requires that AI-driven credit models maintain transparency to avert discrimination. This came to light in 2023 during an audit of Paytm’s lending platform, which faced serious allegations regarding biases against marginalized communities.
Blockchain: Transforming Legal and Governance Systems
Blockchain technology has the potential to revolutionize India’s governance landscape; however, it is not without its legal quandaries.
Land Registry Reforms: The blockchain implementation in Andhra Pradesh has created a secure environment to combat fraud through tamper-proof records. Nonetheless, a dispute in Guntur district in 2023 exposed the limitations within the framework of the Indian Evidence Act, raising questions about legal recognition.
Smart Contracts: Tech Mahindra’s blockchain-based contracts for supply chains faced legal challenges with Indian Railways when a vendor dispute arose around automated penalties, again underlining the necessity for clearer definitions within the Indian Contract Act of 1872.
Digital Rupee (CBDC): The Reserve Bank of India launched the e₹-R pilot, which allowed seamless offline transactions in Mumbai. However, it simultaneously unveiled regulatory gaps regarding how to handle failed transactions, drawing attention to the need for meticulous legal frameworks.
Revolutionizing Legal Practice in India
The legal profession in India is experiencing a dramatic transformation driven by emerging technologies:
AI in Legal Research: Platforms such as CaseMine utilize AI to streamline the analysis of Supreme Court judgments. A recent corporate fraud case demonstrated how a Delhi-based organization used AI tools to decrease research times by an astonishing 70%.
Blockchain in Courts: The Delhi High Court’s integration of blockchain within its e-filing system set a groundbreaking precedent for validating digital evidence, particularly highlighted in a 2023 copyright dispute.
India’s Global Leadership in Tech Governance
India’s leadership during its G20 presidency in 2023 positioned it as a key advocate for the Global South.
The Delhi Declaration: India championed inclusive frameworks for AI, taking into account the risks of job displacement in developing nations, aligning with its “AI for All” policy.
Regulatory Challenges: The central government’s risk-oriented regulatory approach has occasionally conflicted with Karnataka’s startup-friendly AI policies, creating compliance hurdles for innovative firms in Hyderabad.
Ethical Supervision: A 2024 advisory from the IT Ministry emphasized the necessity for third-party audits of AI models in critical sectors, leading to a thorough audit of Practo’s diagnostic tool, which was accused of gender bias.
Incorporating Global Standards into Indian Practices
India’s technological advancements are increasingly aligning with global standards while also offering unique solutions tailored to its own context.
Global Collaboration on AI: Under India’s G20 presidency, the emphasis on “AI for All” has led to the creation of inclusive frameworks designed to alleviate job displacement risks globally. A standout achievement is BharatGPT, a large language model specifically engineered for Indian users, showcasing the country’s potential to deliver diversified solutions.
Digitized Public Infrastructure (DPI): India’s DPI framework facilitates consent-based data sharing, rapid payment systems, and biometric identification, streamlining the delivery of public services. This model has drawn interest from countries around the world looking to integrate technology into their governance structures.
Furthermore, India’s blockchain initiatives are beginning to weave themselves into global supply chains, demonstrated by partnerships with firms like the UAE’s International Holding Co., potentially influencing international trade laws concerning cross-border blockchain uses.
As India navigates the fine line between innovation and ethical considerations, its approach provides insightful lessons for other nations grappling with similar challenges.
The Balance Between Innovation and Ethics
India’s ambition to emerge as a torchbearer in tech governance while also addressing grassroots challenges is evident in its endeavors with AI and blockchain. From the Digital Rupee introduced by the Reserve Bank of India to groundbreaking land reforms in Andhra Pradesh, India stands at the forefront of technological progress. Yet, critical issues remain unresolved:
Accountability: There is an urgent necessity for clearly defined liability frameworks regarding AI errors, ensuring that stakeholders can be held accountable for their actions.
Inclusivity: The challenge of reducing algorithmic biases in vital sectors remains pressing, demanding ongoing strategies for improvement.
Legal Clarity: Current laws must address the status of blockchain records and smart contracts to provide legal certainty in their recognition and enforceability.
By effectively streamlining regulations and fostering international collaboration, India can not only protect its citizens but also become a global benchmark for responsible technology adoption.
This article has been written for the inaugural edition of Ballivoré, the law magazine of Subhash Desai College of Law, Mumbai.