India’s digital sovereignty depends on balancing AI innovation and regulation - Firstpost

Digital sovereignty requires a mix of proactive regulation and state capacity, without deepening Big Tech dependence

The Indian government, in February, organised the AI Impact Summit, 2026. This was the first AI summit in the Global South and saw participation from around a hundred countries. The summit was organised under the central theme of ‘Welfare for All, Happiness for All’ and observed participation from over a lakh delegates. The government organised more than 600 sessions and paid special emphasis on democratisation of AI resources during the summit.

Background

The summit happened at a time when technology regulation has become a key policy priority for the government. The government recently banned deepfakes and increased the regulatory compliance for the technology firms as a fairness standard. It further passed a law to regulate online real-money games, which demonstrated high growth potential. More recently, it conducted a market study to prescribe a self-compliance note to the big tech firms as a soft law measure.

Analysis

One of the key objectives of the summit was openness of the digital economy. The state of the art is defined by the Digital Competition Bill (DCB), 2024, which draws inspiration from the European Digital Markets Act (DMA). The law proposes implementation of ex-ante measures to promote competition in digital markets and draws a fine balance between standardisation and localisation. It has retained provisions on bundling, tying and self-preferencing and adapted positive obligations such as interoperability and advertisement transparency to suit Indian conditions.

One conventional view on AI is that it is a form of digital markets, and any regulatory measure in the digital economy should duly suffice for it. This view is correct because Big Tech firms, indeed, have been engaging in prohibited practices such as bundling, tying and self-preferencing to cement their position and strategically monopolise the market. The competition authorities have castigated such measures under the ex-post competition legal framework, and this could be a justification to maintain the status quo and not implement any ex-ante measures.

The AI story, however, seems to offer more. Some fundamental differences include exponential growth in the use cases of AI and application of network effects and increased economies of scale in various forms. This has complicated the decision-making, as AI seems to mirror digital markets and yet display unknown characteristics. Cloud computing is one example where performance is rooted in the traditional brick-and-mortar model (semiconductor manufacturing), and yet competition concerns around it are novel. This might rekindle the maintaining the status quo vs reform chapter.

The additional leaf in this rekindling would be the current geopolitics. The government has embraced AI solutions on all fronts when the maker of this technology is foreign. This has led to some dependencies leading to concerns around digital control and sovereignty. The government has tried to shed some anxiety by focusing on the Digital Public Infrastructure (DPI); however, many questions remain. Developments worldwide are far from encouraging, where Big Tech firms have publicly offered to raise the domestic military capacity.

It is proposed that digital sovereignty could be achieved through proactive regulation, enhanced state capacity or a combination of both. DCB is just a regulatory proposal on the table, and there could be amended forms such as revised thresholds, additional markets or prioritised chokepoints. The ’essential facility doctrine’ rather sits at the cusp of regulation and state capacity where the government could put its own money, like in DPI, to ensure that the core technology guardrails are public. The extreme form of state capacity could be to invest deeply in technology research & development, which may require adjustment in other priority sectors.

Conclusion

The AI Summit seems to have served the ‘old’ new. This serving could be through a combination of proposals such as the DCB and DPI. A heightened regulatory discourse could just be an aftermath. The core objective should be to resist getting tempted in a frame (‘old vs new’ or ‘status quo vs reform’) and reap dividends without creating many dependencies. This would, indeed, serve India’s technology policy, keeping its people at the centre stage.

(Sumit Jain is a founding member at the Centre for Competition Law and Economics (CCLE), and Nandita S Jha is an assistant professor at Chanakya National Law University, Patna. The views expressed in the above piece are personal and solely those of the authors. They do not necessarily reflect Firstpost’s views.)