AI, DPDP and IT rules will drive new phase of Big Tech regulation in India in 2026

In recent months, India’s approach to governing Big Tech has entered a decisive new phase, shaped by the rapid expansion of artificial intelligence, the operational rollout of the Digital Personal Data Protection (DPDP) framework, and a growing recalibration of platform responsibilities under the Information Technology (IT) Rules.

While artificial intelligence has dominated boardrooms and policy corridors alike, the government’s regulatory stance has remained deliberately measured. “AI has been the flavour of the season,” said Aparajita Bharti, Founding Partner, The Quantum Hub, noting the simultaneous excitement and anxiety around how fast-changing technologies are reshaping markets, labour and daily life. Yet rather than resorting to sweeping pre-emptive regulation, the Indian state has stayed largely pro-innovation, intervening selectively where concrete risks emerge, particularly around deepfakes and synthetic media.

This pragmatic posture reflects a deeper policy shift. According to Sourya Banerjee - Associate Director, Public Policy Communications at Jajabor Brand Consultancy, the government has moved from reactive interventions toward a more collaborative boundary-setting model, where platform dominance is not dismantled but circumscribed. Regulation now clarifies the operational contours within which technology firms continue to scale, even as the state actively encourages their participation in building India’s AI and digital infrastructure. Consultations ahead of the AI Action Summit in February demonstrated this balance: openness to industry input paired with a clear assertion that final policymaking authority rests with the government, regardless of disagreement, as seen earlier in the online gaming sector.

Behind this shift sits an unusually dense year of policy movement. Kamesh Shekar, associate director at The Dialogue pointed to the release of India’s long-awaited AI Governance framework, the finalisation of DPDP rules, the Competition Commission of India’s market study on AI, the RBI’s AI-in-financial-services framework, and the DPIIT working group’s report on copyright and AI. These developments, taken together, mark the year India’s digital state infrastructure formally aligned with the AI era.

However, the framework is far from settled. One of the sharpest tensions lies at the intersection of AI development and DPDP. While the new law strengthens consent, accountability and purpose limitation, both Shekar and Banerjee warn that India’s consent-only model may struggle to accommodate large-scale AI training and text-and-data mining. Without concepts such as “legitimate interest,” already standard in global data protection regimes, India faces unresolved questions about how existing AI models trained on vast data pools will remain compliant. “We will not know the full extent of its implications for at least another year,” Banerjee cautioned.

India’s refusal to replicate Western regulatory templates further complicates the picture. As Bharti explained, policymakers are consciously designing governance structures suited to India’s scale, political economy and growth priorities. Rather than importing the EU’s restrictive playbook, India is pursuing a distinctive model that seeks equilibrium between innovation, sustainability and sovereignty. This is most visible in AI governance, where the government has prioritised strategic autonomy and innovation signalling, supported by major investments in domestic AI capacity through the IndiaAI Mission, alongside global investments by firms such as Google, Microsoft and Amazon, and state support for local players including Zoho, Sarvam and MapMyIndia.

Looking ahead, the most pressing risk is not political will or enforcement capacity, but regulatory coordination. As Banerjee puts it, 2026 will test whether India can convert its expanding patchwork of policies into a coherent ecosystem that serves both economic growth and citizen protection. Meanwhile, both Bharti and Shekar warn that India’s 25-year-old IT Act is straining under the weight of today’s digital economy. Continuous patchwork through IT Rules may soon become unsustainable, increasing pressure for a deeper institutional overhaul, much like the telecom sector’s recent legislative reset.

By the end of this policy cycle, India has built the scaffolding for governing Big Tech in the age of AI. Whether that structure can hold under the combined pressure of global competition, domestic innovation ambitions and rising societal risk will determine the next chapter of India’s digital economy.