India’s Data Protection Law May Hamper AI Growth, Warns IAMAI

The Internet and Mobile Association of India (IAMAI) has raised concerns that India’s new data protection law could stifle the country’s artificial intelligence (AI) ecosystem, particularly affecting startups and smaller technology firms.

In a recent submission to the Ministry of Electronics and Information Technology (MeitY), IAMAI highlighted that ambiguities in the Digital Personal Data Protection Act, 2023 (DPDP Act), make it practically unfeasible for AI companies to verify whether publicly accessible personal data was voluntarily disclosed by individuals.

The industry body warned that the current interpretation of the Act could lead to excessive compliance burdens, slow innovation, and reduce India’s competitiveness in the global AI race.

“Requiring AI companies to determine whether all publicly accessible personal data had been voluntarily made available by data principals themselves was practically unfeasible,” IAMAI said in its report.

IAMAI noted that public personal data—whether shared to meet legal obligations or posted on public platforms—often resurfaces online through multiple channels. It argued that tracking the original context or consent tied to such data is nearly impossible, especially when training AI models on large datasets.

These challenges, according to IAMAI, are most acute for smaller AI developers and startups that lack the resources to carry out extensive data provenance checks.

To address these concerns, the association has recommended amending the DPDP Act to relax restrictions on the use of publicly available data specifically for AI model training. It also suggested a temporary exemption for data fiduciaries using such data solely to train or fine-tune AI systems.

The DPDP Act, passed in 2023, was designed to establish a legal framework for personal data processing and enhance privacy protections in India. However, IAMAI’s submission underscores growing industry unease that the legislation, in its current form, may inadvertently impede progress in fast-evolving tech sectors such as AI.

IAMAI represents a broad spectrum of digital businesses and startups in India and routinely engages with the government on policy issues affecting the digital economy.