Tech Firms Warn Proposed Indian AI Rules Could Hinder Innovation

Leading technology-industry groups are raising concerns with the draft AI-content regulations published by Ministry of Electronics and Information Technology (MeitY), warning that the current proposals may be excessively burdensome for businesses and ineffective at deterring malicious actors.

Key industry stakeholders — including Data Security Council of India (DSCI), Information Technology Industry Council (ITI) and Internet and Mobile Association of India (IAMAI) — say the draft amendments to the Intermediary Rules and Digital Media Ethics Code are too broad and could jeopardise legitimate AI uses. They argue that imposing rigid requirements on all AI-generated content may penalise responsible firms rather than targeting bad actors.

In their submissions, these groups flagged five major issues:

1. The definition of “synthetic content” is broad and may capture benign tools such as language-models or photo-editing apps.
2. Compliance burdens (such as labelling mandates and logging requirements) would be high, especially for startups and smaller players.
3. Enforcement on malicious actors (who may operate offshore) appears weak, raising doubts about whether the rules will be effective.
4. There is potential conflict with existing sector-specific norms and global standards, risking India-specific rules diverging and raising the cost of compliance.
5. The pace of rule-making may outstrip industry readiness, since AI tools evolve rapidly and rigid regulations can stifle innovation.

Despite these concerns, regulators continue to push for safeguards. The recently published India AI Governance Guidelines underline goals such as transparency, accountability and fairness for AI deployments. But industry groups feel that these high-level principles are not yet matched by realistic compliance pathways.

Bottom line: The government and wider industry face a delicate balancing act — how to protect society from harmful AI-driven content (such as deepfakes or synthetic media) while enabling legitimate AI innovation and adoption. If the final rules remain formulaic and heavy-handed, India may risk slowing its AI-ecosystem growth.