In 2024, India was at a juncture between regulation and innovation when a major IT firm’s AI-driven recruitment tool was accused of gender bias for rejecting female applicants based on historical hiring patterns. At the same time, Andhra Pradesh’s blockchain-based land registry system effectively digitized well over 1 million records, resulting in an 80% reduction in property disputes. India faces a dual challenge in addressing the legal and ethical implications of cutting-edge technologies, as evidenced by these contrasting examples.
Regulation and Accountability in the Field of Artificial Intelligence
The adoption of AI in healthcare, finance, and governance is expected to propel the Indian AI market to $14.72 billion by 2030. Nevertheless, this accelerated expansion has revealed critical deficiencies in accountability:
National Strategy on Artificial Intelligence (NSAI): Spearheaded by NITI Aayog, this initiative emphasizes ethical AI in industries such as agriculture and healthcare. For example, in rural Maharashtra, a partnership between Microsoft and NITI Aayog implemented artificial intelligence to facilitate the early detection of diabetic retinopathy. Nevertheless, the pilot was subjected to criticism when the AI misdiagnosed patients as a result of biased training data, underscoring the necessity of comprehensive governance.
Digital Personal Data Protection Act (DPDP), 2023: This law requires consent for data processing and imposes severe penalties for violations. In 2024, a Bengaluru fintech company was subjected to regulatory scrutiny under the DPDP Act after its AI loan approval system exposed compliance loopholes by leaking confidential user data.
Sector-Specific Guidelines:
Healthcare: AI-generated diagnostic reports are now subject to human supervision by the Indian Council of Medical Research (ICMR).
Finance: RBI mandates explainability for credit models that are AI-driven to prevent discrimination. In 2023, an audit was conducted on Paytm’s lending platform in response to allegations of bias against marginalized communities.
Blockchain: Transforming Legal and Governance Systems
India’s governance frameworks are being revolutionized by blockchain technology; however, legal uncertainties persist.
Land Registry Reforms: The blockchain system in Andhra Pradesh has been instrumental in reducing fraud by establishing tamper-proof property records. Nevertheless, a dispute in the Guntur district in 2023 exposed deficiencies in the legal recognition of the Indian Evidence Act.
Smart Contracts: The legal challenge that Tech Mahindra’s blockchain-based supply chain contracts with Indian Railways encountered was a vendor’s dispute over automated penalties. This underscores the necessity for clarity under the Indian Contract Act, of 1872.
Digital Rupee (CBDC): The Reserve Bank of India (RBI) conducted the e₹-R pilot, which facilitated seamless offline transactions in Mumbai. However, it also revealed regulatory deficiencies in the resolution of failing transactions.
Revolutionizing Legal Practice in India
The practice of law is being revolutionized by emerging technologies:
AI in Legal Research: CaseMine and other platforms employ AI to analyze Supreme Court judgments. In a corporate fraud instance, a Delhi-based organization utilized AI tools to reduce research time by 70%.
Blockchain in Courts: The Delhi High Court’s blockchain-integrated e-filing system established a precedent for digital evidence by guaranteeing the authenticity of documents in a 2023 copyright dispute.
India’s Global Leadership in Tech Governance
India’s presidency of the G20 in 2023 established it as a spokesperson for the Global South.
The Delhi Declaration: India advocated for inclusive AI frameworks, addressing job displacement risks in developing nations, as part of its “AI for All” policy.
Regulatory Challenges: The central government’s risk-centric approach clashed with Karnataka’s startup-friendly AI policy, resulting in compliance obstacles for Hyderabad-based startups.
Ethical Supervision: Third-party audits of AI models in critical sectors were required by the IT Ministry’s 2024 advisory. An audit was conducted on Practo’s diagnostic instrument in response to allegations of gender bias.
Incorporating Global Standards into Indian Practices
The technological advancements of India are becoming more in line with global standards while simultaneously offering distinctive solutions.
Global Collaboration on AI: India’s presidency of the G20 in 2023 prioritized “AI for All,” which promoted inclusive frameworks that mitigated job displacement risks on a global scale. India’s capacity to develop scalable solutions for diverse populations is demonstrated by initiatives such as BharatGPT, a large language model that is specifically designed for Indian consumers.
Digitized Public Infrastructure (DPI): India’s DPI integrates consent-based data exchange, fast payment platforms, and biometric identification systems to efficiently deliver public services. Countries worldwide are currently investigating this concept as a model for the integration of technology into governance systems.
India’s blockchain innovations are being incorporated into global supply chains through partnerships with firms such as the UAE’s International Holding Co., demonstrating its potential to influence international trade laws for cross-border blockchain applications.
India’s strategy, which involves a delicate balance between innovation and ethical considerations, provides valuable insights for other nations that are facing comparable obstacles.
The Balance Between Innovation and Ethics
India’s aspiration to be a leader in tech governance while simultaneously addressing grassroots challenges is exemplified by its journey with AI and blockchain. India is at the forefront of innovation, from the digital rupee introduced by the Reserve Bank of India to the land reforms implemented in Andhra Pradesh. However, there are still unresolved issues that must be addressed.
Accountability: Clearly defined liability frameworks for AI errors.
Inclusivity: Reducing algorithmic bias in critical sectors.
Legal Clarity: The identification of blockchain records and smart contracts by current laws.
India can not only protect its citizens but also serve as a model for responsible technology adoption on a global scale by simplifying regulations and encouraging global collaboration.
This article has been written for the inaugural edition of Ballivoré, the law magazine of Subhash Desai College of Law, Mumbai.