The leaps and strides that artificial intelligence (AI) has undergone in the present times, and the rate at which it continues to do so on a day-to-day basis, makes it one of the largest and most cardinal technology revolutions of our lifetimes, where it has the potential to disrupt almost all aspects of human existence. Andrew Ng[1] has famously compared the transcendental impact of artificial intelligence to that of the introduction of electricity approximately a century ago, which went on to revolutionize almost every major sector in the coming years.[2]
What is Artificial Intelligence?
Artificial Intelligence is a constellation of technologies which enables machines to act with higher levels of intelligence and mimic or emulate certain capabilities of human such as that of sense, comprehension, and action. Simply put, artificial intelligence refers to the ability of machines to perform cognitive tasks like humans such as thinking, learning, logical reasoning, perceiving, and decision making.
With such advancement in technology, computer vision and audio processing are capable of actively perceiving the world around a machine by capturing and processing images, sounds, and speech. The comprehension and processing of the information which is collected by a machine is enabled through the natural language processing and inference engines of artificial intelligence systems.
These human-like capabilities are enhanced by the ability of machines to continuously learn from their experience and accordingly, constantly adapt and evolve over time. Even though initially artificial intelligence was conceived merely as a technology that could mimic human intelligence, however, given its increasing capability of developing in an organic manner, artificial intelligence has evolved in ways that has far exceeded its original expectations.
Growth of Artificial Intelligence
Considering the growth of capabilities of artificial intelligence, its demand and utility in various fields has also dramatically expanded. The global artificial intelligence market size was estimated approximately at USD 120,000,000,000 (United States Dollars One Hundred Twenty Billion) in 2022, and it is further expected to hit an approximate of USD 1591,000,000,000 (United States Dollars One Five Hundred Ninety-One Billion) by 2030 with a registered compounded annual growth rate (CAGR) of about 38% (thirty eight percent) from 2022 to 2030. In 2021, the artificial intelligence in the North American market was valued at USD 51,000,000,000 (United States Dollars Fifty-One Billion).[3]
Innovation in technology is, and always has been one of the key aspects where the growth of various industries has been banked on. The rapid penetration of advanced technology and growth of the internet holds a significant portion of contribution towards the growth of the global artificial intelligence market in the recent years. This has been supported by heavy investments by tech-giants in the research and development of AI, and the escalating demand for artificial intelligence technology among various verticals such as automotive, healthcare, banking & finance, logistics, retail, manufacturing, and so on.
Witnessing the increased capabilities of machines such as the self-driving features in vehicles and development of advanced life-saving medical devices, has contributed to the rising popularity and demand for implementation and usage of artificial intelligence in all walks of life. In this context, the global tech-giants such as Google, IBM, Amazon, and Apple have increased their investments for the upgradation and development of various AI applications.[4]
Additionally, end-use industries have also commenced integrating artificial intelligence into their businesses to achieve a streamlined operational process. The same is gaining momentum in order to become more efficient and result-oriented in approach. This has also encouraged new entrants in venturing into the AI marketplace by way of offering niche and application-specific products and solutions.
Indian Government Initiatives on AI
There is no doubt that favourable government initiatives are likely to have a positive impact on the growth of AI. The Government of India has continued to increase its allocated expenditure for Digital India to boost AI, IoT, big data, cyber security, machine learning and robotics. It is expected for the artificial intelligence market to grow significantly in the banking, financial services, and insurance (BFSI) sector owing to data mining applications, since there has been an increase in the in the adoption of artificial intelligence solutions in data analytics, fraud detection, cybersecurity, and database systems.[5]
While the framework and the regulatory support in relation to artificial intelligence is still in its nascent stages, and there remains much to explore, the Government has taken several steps to indicate that it wishes to create and enforce an AI-friendly ecosystem in India. A few of such initiatives are set out below[6]:
(a) The Ministry of Commerce and Industry in the year of 2017 had established an AI taskforce for highlighting various sectors[7] which held significance for the AI regime and were likely to become a challenge and cause of concern while adopting AI.[8]
(b) The Ministry of Electronics and IT (MeitY) has also initiated a programme called the FutureSkills PRIME[9] in collaboration with NASSCOM, a business-to-customer (B2C) framework for re-skilling/ up-skilling of IT professionals in areas including Artificial Intelligence. As of March 2022, it is estimated that approximately 7 lakh candidates have signed-up on the portal, of which, around 1.2 lakh candidates have completed their courses.
(c) The National Institution for Transforming India (NITI Aayog) published the National Strategy for Artificial Intelligence for the proposes of developing an ecosystem for the research and adoption of artificial intelligence.
(d) The Government has also launched a portal named ‘National AI Portal’[10], which is essentially a repository for artificial intelligence-based initiatives in India, at a single place.
(e) NITI Aayog recommended that an AI-explicit computer framework ‘AIRAWAT’ for the purposes of satisfying the processing needs of innovation hubs, start-ups, AI researchers and students.[11]
Impact on Various Sectors
Defence Sector
Seeing the vast implications and possibilities of AI, the introduction of artificial intelligence in modern warfare remains an inevitable event. By leveraging AI-powered systems, defence personnel can make informed decisions about troop movements, resource allocation and strategic planning, thereby enhancing operational efficiency.
In July 2022, the Ministry of Defence launched 75 (seventy-five) newly developed AI products and technologies specifically for the defence sector[12], stating that AI-enabled military devices are capable of handling large amounts of data efficiently and are also beneficial in training of soldiers. Defence AI Council (DAIC) and Defence AI Project Agency (DAIPA) have been constituted with INR 1000,00,00,000 (Indian Rupees One Thousand Crores) annual budget specifically for AI-enabled projects.[13] The Centre for AI and Robotics (CAIR), a laboratory of the Defence Research and Development Organization (DRDO), a primary laboratory for research and development in different areas of Defence Information and Communication Technology (ICT), is also developing an AI-based signal intelligence solution to enhance intelligence collation and analysis capabilities of the armed forces.
Healthcare Sector
In the global market, India is uniquely positioned with high quality clinical as well as engineering capabilities to support and strengthen the healthcare sector vis-à-vis the developments in artificial intelligence. The growth is particularly driven by factors such as improving patient outcomes, reducing healthcare costs, and addressing the shortage of healthcare professionals in India. Moreover, the increasing investments by healthcare professionals and tech-companies in AI-based solutions and the ever-growing availability of healthcare data is only expected to further contribute to the growth of the AI industry in the Indian healthcare system.
Along with providing innovative healthcare solutions, AI is also expected to augment the scarce personnel and laboratory management facilities, which will help in overcoming the barriers to the access of healthcare facilities. Further, it is also expected to provide and assist in early detection, diagnosis, decision making and treatment, to a significant part of India. In this regard, NITI Aayog is collaborating with Microsoft and Forus Health for developing and implementing a technology for the purposes of early detection of diabetic retinopathy.[14] The idea of introducing AI in the healthcare system is for the services to adopt a more proactive approach, with the emphasis on preventive techniques in lieu of curing the sick.
Finance Sector
For improved operational efficiency and automation, various financial institutions are increasingly adopting AI-based technology solutions. These AI-driven technologies are being used for the purposes of automating repetitive tasks such as data entry and financial analysis, thereby reducing costs and increasing accuracy of the entire process.
AI is useful in identifying patterns, anomalies and data points which may indicate potential risks, thereby aiding financial institutions in improved risk management and compliance. With its capacity for rapid analysis, AI is able to quickly assess large volumes of data for detecting any irregularities or frauds. Further, automated systems reduce the possibility of human error in respect of identifying suspicious activity or non-compliance with regulations. In addition to that, advanced algorithms are able to continuously monitor business activities even after transactions are completed. This allows the financial institutions to have much greater control over their operations and makes them better prepared for unexpected events such as natural disasters or cyber-attacks.
Legal and Ethical Concerns
Although one sees great advantages, one cannot overlook the severe challenges that accompany the use of artificial intelligence, especially given its unregulated structure in India. In critical sectors such as healthcare, usage of AI in the absence of a robust regulatory framework raises important questions which may largely go unanswered such as whether the AI programs being used ensure consent and privacy of the sensitive personal information of the patients; or questions regarding the apportionment of liability between the AI developer, the machine, or the program engineer, in case of an error in diagnosis, inaccurate use of data, or occurrence of a technological malfunction. Cases where the diagnosis of a patient is AI-enabled, it becomes difficult to determine if an incorrect diagnosis has occurred due to a fault of the operating diagnostician, error in the primary data feed or if the same is a systematic glitch of the AI program.
In sectors such as national security, owing to the dual use of AI (i.e., by military and civilian applications), there remains a higher risk of easy accessibility of the AI-based tools by non-state actors, and this requires strict controls on the flow of technology. Further, biases in data like imbalanced datasets, racial issues, and poisoning of data may considerably affect the efficiency of the AI algorithms and raise ethical concerns as well. Considering the lack of transparency in the AI algorithms, there lies a definite lack of clarity for the decision-maker regarding the rationale behind a decision, which leads to concerns about the parameters basis which such automated choices are made, and the same results in distrust regarding the use of AI systems.[15]
Further, areas such as the use of copyrighted materials by AI models is considered as a legally grey area, since presently the copyright laws in India do not protect and safeguard any creation which has been completely generated by AI, irrespective of the fact regarding whether such creation has stemmed from a human prompt. In this regard, it may be pertinent to note that the U.S. Copyright Office has adopted the view that creative generations by non-human entities (including machines) are considered as materials which are not eligible for copyright protection.[16]
An assessment of the above shows that across all AI strategies, ethical dimensions and legal regulation of AI have been highlighted as the major concerns that need to be addressed. Algorithmic transparency and clarity on liability, accountability and oversight, bias and discrimination, and privacy, are the key ethical and regulatory questions which have been raised.
Hence, although there exist vast opportunities for advancement in all sectors of life which are today represented by AI, however AI is also accompanied by its distinct set of challenges, and if not properly regulated the same may pose a great threat. While presently there exists no legal framework regulating AI in India, in the past few years there is keenness in various ministries to bring forth a framework to regulate AI.
The Ministry of Commerce and Industry took the lead and constituted a Task Force on AI for India’s economic transformation in 2017 to initiate a public consultation on regulation of AI in India. The report of the task force which was released in early 2018 laid out specific challenges in the adoption of AI based solutions in ten sectors[17]. As per the report, the key issues surrounding regulation of AI in India included lack of expertise in AI technologies, and collection and processing of user data without compromising user privacy. In addition to the Ministry of Commerce and Industry, the Ministry of Defence[18], MeitY, and the Reserve Bank of India have also recognised the importance of development of AI capabilities in India and their regulation in various dominant sectors.
The Securities and Exchange Board of India (SEBI) has also recognised the growing importance of artificial intelligence and is of the view that AI and machine learning systems are “black boxes”, which makes their behavior difficult to quantify and predict. Owing to this factor, SEBI believes that it is imperative to ensure that any advertised financial benefit owing to such technologies in financial products which are investor-facing in nature and are offered by market intermediaries, should not constitute to misrepresentation. To this end, SEBI has issued circulars in respect of market intermediaries[19] and mutual funds[20] for the purposes of instructing them to report their AI based systems, applications, and products to SEBI.
Despite the aforementioned initiatives, the attempts in regulating AI have been decidedly slow and cautious. Owing to the lack of a specific statute governing the implementation of AI systems, they continue to being governed by the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011, which have been enacted under the Information Technology Act, 2000. Furthermore, since user data is the fuel for any AI capability, any collection, processing and transfer of personal data of individuals for developing and implementing an AI capability will be subject to the extant data privacy and protection regulation, which includes the three-fold requirement laid in the landmark case of Justice K. S. Puttaswamy (Retd.) and Anr. vs Union of India and Ors.[21], namely: (i) legality, which postulates the existence of law; (ii) need, defined in terms of a legitimate state aim; and (iii) proportionality which ensures a rational nexus between the objects and the means adopted to achieve them.
In addition to the above, while MeitY, with the aim of inter alia addressing the lacunae in the governance of AI, introduced the Digital Person Data Protection Bill, 2022, which aims to govern personal data processing, requiring AI systems to be transparent, explainable, auditable, and to eliminate biases, however, it may be noted that considering the said bill is yet to be enforced, its effectiveness remains to be assessed.
The Way Forward
In view of the black box nature of AI, it becomes critical for an open and constructive dialogue between the regulatory and judicial authorities, the developers, and other stakeholders to ensure that the outcomes are ethically sound and socially responsible.
In order to articulate a national policy and regulatory framework to govern AI, it remains the ask of the hour to have adequate institutional planning in place, for in lack thereof, the same poses a risk of the nation-wide strategies being too monolithic in nature. Owing to the ever-evolving, organic, and adaptive nature of the AI systems, a principle-based approach in framing the legal policies may be adopted by the Indian legislature in order to provide adequate safeguards to the users and subjects of AI in the present times. For inculcating a pro-user approach in the AI developers, government may consider constituting mechanisms and incentives in a manner such that AI developers disassociate from the fail-fast fundamentals and rather view consumer protection and safety as a value-added incentive, which may also offer them with competitive advantages.
Authored by: DSK Legal - Rishi Anand, Partner; Snigdha Prakash, Senior Associate and Akansha Jain, Associate
[1] Andrew Ng is the former head of Baidu AI Group/ Google Brain and the co-founder of Coursera.
[2] Why AI Is the ‘New Electricity’, Business Journal from the Wharton School of the University of Pennsylvania (accessible here).
[3] https://www.precedenceresearch.com/artificial-intelligence-market
[4] https://brandequity.economictimes.indiatimes.com/news/digital/five-tech-giants-join-forces-to-create-partnership-on-ai/54586068
[5] Supra note 2.
[6] Press Release titled ‘Artificial Intelligence’ by MeitY dated March 30, 2022 (accessible here).
[7] Sectors such as manufacturing, fintech, healthcare, agriculture, education, retail, aid for differently abled persons, the environment, national security and public utility services were highlighted as important sectors in terms of AI.
[8] https://www.globallegalinsights.com/practice-areas/ai-machine-learning-and-big-data-laws-and-regulations/india
[9] The programme by MeitY is accessible here.
[10] The National AI Portal is accessible here.
[11] NITI Aayog’s paper ‘AIRAWAT – Establishing an AI Specific Cloud Computing Infrastructure for India’ dated January 2020, is accessible here.
[12] The press release by the Ministry of Defence dated July 11, 2022, is accessible here.
[13] The press release by the Ministry of Defence dated March 28, 2022, is accessible here.
[14] Discussion Paper National Strategy for Artificial Intelligence, 2018 (accessible here).
[15] AI and National Security: Major Power Perspectives and Challenges, Sanur Sharma dated September 12, 2022 (accessible here).
[16] The Legal Implications of AI-Generated Content in Copyright Law, Anndy Lian dated May 29, 2023 (accessible here)
[17] Report of Task Force on AI, constituted by The Ministry of Commerce and Industry (accessible here).
[18] The recommendations of the MoD constituted task force for Strategic Implementation of AI for National Security and Defence were implemented by the Department of Defence Production vide an order dated February 08, 2019. The order directed – (i) establishment of a High-Level Defence AI Council to provide necessary guidance to enable and effect development and tailoring of operating framework, policy level challenges and structural support; (ii) integration of AI into India’s defence strategy; (iii) incorporation of AI training in all defence training centres, etc. A budgetary allocation of Rs. 100 Crores was prescribed by MoD for implementation of recommendations given.
[19] SEBI circular dated January 04, 2019, on reporting by market intermediaries is accessible here.
[20] SEBI circular dated May 09, 2019, on reporting by mutual funds is accessible here.
[21] Justice K. S. Puttaswamy (Retd.) and Anr. vs Union of India and Ors., (2017) 10 SCC 1