The Indian government's ambitious plan to mandate royalty payments for copyrighted data used in training artificial intelligence (AI) models has ignited a significant clash with global technology giants. The proposal, aimed at fairly compensating creators, is being challenged by major tech firms and industry bodies who argue it is technically unworkable and could stifle innovation.
The Core of the Dispute: A Mandatory Royalty Framework
At the heart of the controversy is a discussion paper from the Department for Promotion of Industry and Internal Trade (DPIIT), announced on 8 December. The framework seeks to establish a system where AI developers pay a flat fee, determined by a central authority, to creators whose copyrighted work is used to train AI systems. This fee would be distributed through a government-appointed body, requiring creators to register to claim royalties. Notably, the proposal includes the idea of retrospective payments for data already utilized by companies.
However, Big Tech firms have raised fundamental objections. They contend that separating purely commercial AI use from early-stage non-profit or research projects is extremely difficult. An internal note from a major tech group, shared with Mint, highlighted a critical legal reversal: the proposal places the burden of proof on AI developers to show they haven't infringed copyright, a task deemed "extremely onerous and technically infeasible" given the probabilistic nature of generative AI.
Industry Backlash and the Nasscom Dissent
The resistance is formally led by Nasscom, the premier industry body for India's technology sector, which was part of DPIIT's working panel. On 17 December, Nasscom published a strong 'dissent note' against the proposed framework.
The note argues that the plan would strip individual creators, especially small and niche ones, of their right to negotiate deals directly. "Creating a payment pipeline does not, by itself, ensure that compensation is fair or meaningful," Nasscom stated. It further warned that a flat-rate system would disadvantage specialized creators who could otherwise command higher market-based compensation, favoring large-scale content producers instead.
Ashish Aggarwal, Vice-President of Public Policy at Nasscom, emphasized the practical risks, questioning whether centralization is the best solution or if rules enabling enforceable choice at scale would be more effective.
Government's Stance: Seeking Balance Amid Global Precedents
The government, while acknowledging the challenges, remains committed to finding a regulatory balance. S. Krishnan, Secretary at the Ministry of Electronics and Information Technology (Meity), stated that the concerns of plagiarism and the need to encourage creativity in the AI age make some form of copyright protection necessary.
"We will have to find a balance," Krishnan said in an interview, clarifying that the current proposal is a discussion paper to encourage debate and not a final rule. He indicated that many further consultations are planned. Another senior Meity official confirmed India's intent to regulate AI from a "harm's lens" and establish an automated, fair compensatory model to prevent future litigation.
Krishnan also pointed to global developments, noting that the issue is sub judice worldwide. He referenced court verdicts in the UK and private contracts between large AI companies and major media organizations as clear precedents for collective bargaining. "The media expects some collective bargaining and uniform room with AI firms, so that all of them benefit," he added.
Legal Hurdles and the Road Ahead
Legal experts echo the complexity of the path forward. Shailendra Bhandare, Partner at Khaitan & Co., noted the long-term implementation challenges and potential dissatisfaction among copyright holders who may not wish to grant mandatory licenses.
Executives from companies like Meta, Google, and OpenAI, who spoke anonymously, cited the models of Japan and Singapore—which legalize data collection for AI training—as more ideal. They also dismissed the retrospective copyright claim as "next to impossible," arguing it could take years to become technically feasible and is not conducive for the industry's growth.
As the debate intensifies, India stands at a policy crossroads, attempting to craft a uniquely Indian solution to a global problem. The outcome will hinge on reconciling the protection of creator rights with the practical realities of developing cutting-edge AI technology.
