India’s data protection law poses challenges for AI start-ups: IAMAI

In the interim, IAMAI suggested that the government leave out companies from the Act’s provisions, as long as publicly available personal data is used only to train AI models

Unclear rules around publicly available personal data in India’s data protection law will disproportionately affect start-ups and small companies working on AI models, said the Internet and Mobile Association of India (IAMAI) in an additional submission to the government.

The industry body pointed out that members Reliance Jio and Culver Max Entertainment did not agree with the views in this latest letter.

The IAMAI has asked the government to specify the intent of the rules that specifically look at publicly available personal data to ensure that companies can process the information unconditionally for training or fine-tuning of AI models.

“Ambiguities in the conditions laid out in clauses may pose practical challenges for AI companies, particularly those using large data sets for training their models,” said the IAMAI, flagging difficulties for start-ups developing AI models tailored to India’s linguistic, cultural, and economic needs.

Companies will struggle to understand whether a user has voluntarily made their personal data public for example when switching privacy settings from public to private. Further, personal data shared once for legal reasons may resurface online through various means, well after the initial legal disclosure, said the industry body.

“Determining whether all publicly accessible personal data has been made available by [users] themselves is unfeasible… Restricting access would raise entry barriers, escalating AI development costs and stifle competition and innovation in India’s AI ecosystem,” said the IAMAI.

In the interim, IAMAI suggested that the government leave out companies from the Act’s provisions, as long as publicly available personal data is used only to train AI models. It argued doing so helped the domestic market retain its competitive advantage, particularly when countries like the US and China minimise regulatory burden on AI businesses.

On the flipside, policy experts in January talked about how India’s data protection laws fail to uphold user privacy rights, and abide by the K S Puttaswamy judgment that specified a test to ensure that the government did not violate the privacy right. Interestingly, even the Press Club of India (PCI), the Indian Women’s Press Corps, Digipub and the Editors’ Guild of India recently met with the government demanding that their professional work be kept outside the purview of the Act.

Published on August 7, 2025