Source: Observer Research Foundation (ORF)

This expert analysis from the Observer Research Foundation (ORF) examines the critical policy choices facing India as it seeks to become a global leader in artificial intelligence. The author argues that India is at a crossroads, needing to strike a delicate balance between three competing priorities: the push for data localisation to ensure digital sovereignty, the imperative to protect citizen privacy, and the need to foster an environment of innovation for its burgeoning AI industry. The piece contends that overly strict data localisation policies could inadvertently stifle the growth of AI.

The article explains that AI development, particularly for large language models, relies on access to vast and diverse datasets. Mandating that all data be stored and processed within India's borders could limit the data available to Indian researchers and startups, putting them at a competitive disadvantage. It could also deter foreign investment and collaboration. The author advocates for a more nuanced approach to data governance, one that allows for the cross-border flow of data under strong and adequate privacy safeguards. This balanced strategy, it is argued, would better serve India's long-term goal of building a world-class AI ecosystem while still protecting the privacy and security of its citizens.