India Shifts to Risk-Based Legislation for Artificial Intelligence Governance

The Bottom Line

•India is adopting a risk-based AI law to balance innovation with national security and public safety.
•Companies must prepare for stricter compliance standards for high-risk AI applications in finance and healthcare.

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[The Legislative Shift]:

India is moving toward a comprehensive, risk-based legal framework to govern artificial intelligence, marking a departure from the previous reliance on existing IT laws. The proposed legislation will categorize AI systems by risk level, ensuring that low-risk tools like chatbots face minimal oversight, while high-risk applications in banking, finance, and healthcare encounter stringent regulatory requirements.

[The Regulatory Rationale]:

This policy evolution follows the February 2026 amendments to the IT Rules, which mandated that platforms label synthetic content and remove unlawful deepfakes within a three-hour window. The government now seeks to formalize these protections, including granting emergency powers to shut down AI systems or demand technical disclosures during national crises, ensuring that rapid technological adoption does not compromise public safety or data integrity.

[Future Implementation]:

The Ministry of Electronics and Information Technology is currently planning a massive overhaul of government infrastructure, embedding AI into modernized systems. Simultaneously, the Jharkhand state government is set to unveil its 'AI Policy 2026' in Delhi, providing a five-year roadmap for integrating responsible AI into public services, signaling a coordinated national effort to standardize AI deployment across both central and state administrative levels.

Pulse Intelligence

^{AI Analysis}

Context & Background

The government previously maintained that existing legal frameworks were sufficient to manage AI-related risks.
February 2026 IT Rule amendments formally brought synthetically generated content under intermediary due-diligence frameworks.
Platforms are currently required to flag synthetic media and remove non-consensual deepfakes within strict timeframes.

Key Consequences

High-risk AI developers will face increased compliance costs and mandatory technical disclosure requirements.
The government will gain emergency authority to intervene in AI operations during security or public crises.
State-level AI policies will likely align with the new central risk-based classification framework.

Market & Economic Impact

Not applicable.