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Expert Take: A Gentle Hand on the Digital Tiller: Why India's Cautious Approach to AI Regulation is a Win for All

Generative AI is rapidly integrating into everyday digital products, sparking debate between believers who see enhanced productivity and skeptics concerned about anti-competitive practices. The resolution of this tension holds significant economic implications, with India pursuing a balanced regulatory approach combining proactive guidance and vigilant enforcement to foster innovation while ensuring market openness and trustworthiness.

• ETLegalWorld

• Published On Apr 8, 2026 at 11:21 PM IST

In the shifting seas of digital innovation, a new tide is rising: Generative AI. While standalone AI digital products such as Claude and ChatGPT make all the headlines, AI is also becoming an invisible and indispensable part of the products we use every day. From Microsoft Word's Copilot helping us write to Google Search's AI Mode refining our queries, AI is weaving itself into the fabric of our digital lives.

Believers and Skeptics

Many view such AI-integrations as clear instances of improved product designs, offering real benefits to consumers. Faster, more precise results and a smoother user experience that saves time and enhances productivity across millions of daily interactions. To such believers, the AI-fication of our digital landscape is necessary, value-creating, and needs to happen as frictionlessly as possible.

Advt Yet skeptics, especially those with an antitrust perspective, also see potential downsides of such AI-fication. They fear that the promise of AI could well be a potential Trojan Horse. Big companies, under the guise of AI-fication, can sneak in anticompetitive actions, driving out competitors (for example, their AI-recommendation engines pushing their own products) and exploiting customers (say, AI-assisted hyper-personalized pricing which squeezes customers to their limits).

High Stakes

How this tension between the believers and the skeptics ends up resolving will have great implications for the global, and Indian, economy. The global AI market is projected to reach 1.8-trillion-dollar value by 2030, while India's AI sector could account for close to twenty percent of the country's GDP in the same time frame. Given the stakes, it is no surprise to find an intense debate surrounding the issue of AI regulation.

The skeptics demand that policymakers intervene early and intensively, fearing that markets may tip toward irreversible concentration otherwise. But, the believers counter, such heavy and premature regulation could discourage companies from experimenting with new AI-powered features for fear of penalties or compliance burdens. Consumers could ultimately lose productivity gains that studies suggest might reach twenty to thirty percent in knowledge work. The believers favour a hands-off approach, letting the AI-driven market disruption play itself out, relying on the embedded wisdom of the market.

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Insights from around the globe

Looking abroad offers useful lessons. One example is the European Union's AI Act, which classifies systems according to risk levels. High-risk applications such as hiring tools or credit scoring systems face stronger transparency obligations and governance standards. Lower-risk systems encounter lighter requirements, allowing experimentation to continue without excessive barriers. Interestingly, the European competition authorities have also begun to investigate certain AI products under existing competition law.

The United States offers a contrasting approach on overarching regulation. Instead of any sweeping legislation, regulators rely largely on existing antitrust laws and sector-specific guidance. This framework provides flexibility and allows authorities to respond to real evidence of wrongdoing. However, critics argue that case-by-case enforcement may struggle to keep pace with the speed of technological change.

AI regulation: the Indian approach

India has sought to craft its own balanced model by combining proactive guidance with vigilant enforcement. Policymakers, such as MeitY and the CCI, have issued principles-based guidelines encouraging developers to prioritize fairness, accountability, safety, and transparency in AI design. They have noted the sufficiency of existing Indian legal frameworks (e.g., antitrust law, consumer protection law, etc), to regulate AI meaningfully and, so far, the focus is on creating a voluntary, self-regulatory ecosystem. Accordingly, there has been no push for rigid AI-specific rules which can have unintended chilling effects on innovation and growth.

At the same time, enforcement institutions such as the CCI, remain alert to concrete harms and have shown the appetite to tackle any such cases rigorously. This dual structure of guidance and enforcement could well be the pragmatic idealism the Indian digital economy may need.

The stakes are particularly high for India, home to a vibrant startup ecosystem and rapidly expanding digital economy. Thoughtful oversight could help local innovators scale globally while keeping markets open and trustworthy. A measured regulatory hand would reassure investors, encourage research spending and ensure that the benefits of AI adoption reach businesses workers and consumers alike.

(Views are personal)