India's AI Policy Shift: What a New AI-Specific Law Could Mean for Businesses
A fresh AI-specific law may be coming
In June 2026, Union Minister for Electronics and IT Ashwini Vaishnaw indicated the government may govern AI differently from its earlier stated approach, noting that 'the world of AI is very different from the world when the (Information Technology) Act was enacted in 2000.' This signals India may move toward AI-specific legislation rather than stretching the existing IT Act to cover AI.
The current approach is 'light-touch' guidance, not hard law
In November 2025, MeitY released the India AI Governance Guidelines under the IndiaAI Mission. These are not enforceable law but a foundational reference for responsible AI adoption, prioritizing innovation while mitigating harms through existing laws and voluntary measures — with a use-case-driven focus on education, healthcare, energy, agriculture, and financial services.
RBI is already moving on AI cyber risk
The Reserve Bank of India issued a directive in early June 2026 giving banks and other regulated entities until June 30, 2026, to submit board-approved gap assessments on frontier-AI cyber risks — a concrete early sign that Indian regulators are treating AI risk in critical sectors as a present concern, not a future one.
A cautionary example from the courts
In early July 2026, the Supreme Court of India set aside orders from the National Company Law Tribunal and Appellate Tribunal after finding they were based on AI-generated fake legal precedents. This is a clear signal to Indian businesses using generative AI in any professional or compliance context: outputs need human verification against real sources, not blind trust.
What this means if you're building AI products in India
With formal AI-specific law still taking shape, Indian businesses have a window to build responsible AI practices — documentation, human review, and output verification — ahead of formal enforcement, rather than retrofitting compliance later. Sectors already facing regulatory attention (BFSI, healthcare) should move first.
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