AI Training Revolution: India’s Bold Move to Charge OpenAI and Google for Copyrighted Content

Imagine a world where every piece of content used to train artificial intelligence comes with a price tag. That’s exactly what India is proposing in a groundbreaking move that could fundamentally reshape how tech giants like OpenAI and Google operate in one of their fastest-growing markets. As AI continues to revolutionize industries from finance to creative arts, India’s new framework for AI training on copyrighted content represents one of the most significant regulatory interventions in the global AI landscape.

What Is India’s Proposed AI Training Royalty System?

India’s Department for Promotion of Industry and Internal Trade has unveiled a radical proposal that would require AI companies to pay royalties when they use copyrighted material to train their models. The framework establishes a “mandatory blanket license” system where AI developers gain automatic access to all copyrighted works in exchange for payments to a central collecting body. This body, composed of rights-holding organizations, would then distribute royalties to creators including writers, musicians, and artists.

The system aims to address several key challenges:

• Lower compliance costs for AI companies by eliminating individual negotiations
• Ensure fair compensation for creators whose work fuels AI development
• Create legal certainty in an area currently plagued by lawsuits and ambiguity
• Establish India as a leader in balanced AI governance

Why This Matters for OpenAI and Google’s Operations in India

India represents a critical market for AI companies, with OpenAI CEO Sam Altman recently stating that India is their second-largest market after the United States and “may well become our largest.” The committee’s 125-page submission argues that since AI firms derive significant revenue from Indian users while relying on Indian creators’ work to train their models, a portion of that value should flow back to those creators.

The proposal comes at a time when:

Global Context: How India’s Approach Differs from US and EU

While the United States and European Union are debating transparency obligations and fair-use boundaries, India is proposing one of the most interventionist approaches yet. Unlike Western jurisdictions where courts are still weighing whether AI training qualifies as fair use, India’s framework would provide clear rules from the outset.

Key differences include:

• US Approach: Relies on fair use doctrine, currently being tested in multiple lawsuits
• EU Approach: Focuses on transparency requirements and specific exceptions
• India’s Approach: Mandatory licensing with automatic access and guaranteed compensation

Industry Pushback: Why Tech Companies Are Concerned

Not everyone supports India’s proposed model. Major industry bodies have filed formal dissents, warning that the mandatory licensing regime could have unintended consequences.

Nasscom, representing technology firms including Google and Microsoft, argues that India should instead adopt a broad text-and-data-mining exception. They warn that forcing companies to pay for all training data could:

• Slow innovation and AI development
• Increase costs for AI startups and smaller companies
• Create administrative burdens that hinder growth

The Business Software Alliance, representing firms like Adobe, Amazon Web Services, and Microsoft, has pressed the Indian government to avoid a purely licensing-based regime. They warn that limiting AI models to smaller sets of licensed material could reduce model quality and “increase the risk that outputs simply reflect trends and biases of the limited training data sets.”

The Legal Battlefield: Current Copyright Challenges in AI Training

India’s proposal lands amid intensifying legal battles worldwide. In India itself, news agency ANI has sued OpenAI in the Delhi High Court, arguing its articles were used without permission. This case has prompted the court to examine whether AI training constitutes reproduction or falls under “fair dealing” protections.

Globally, similar disputes are unfolding:

• Authors and publishers suing AI companies in US courts
• Artists challenging AI image generators in Europe
• News organizations seeking compensation for content used in training

How the Proposed System Would Work in Practice

The committee’s proposed “hybrid model” would function through a single collecting body that serves as a “single window” for all AI training licensing. This system would:

1. Grant AI firms automatic access to all lawfully available copyrighted works
2. Require payment of royalties into the central collecting body
3. Distribute proceeds to both registered and unregistered creators
4. Eliminate the need for individual negotiations between AI companies and rights holders

The committee argues this approach represents “the least burdensome way to manage large-scale AI training” while ensuring creators are compensated from the outset.

What Happens Next: The Road to Implementation

The Indian government has opened the proposal for public consultation, giving companies and stakeholders 30 days to submit feedback. After reviewing responses, the committee will finalize its recommendations before the framework is taken up by the government for potential implementation.

Key milestones to watch:

• Public consultation period completion
• Committee’s final recommendations
• Government decision on implementation
• Potential legal challenges from industry groups
• International reactions and potential copycat regulations

FAQs About India’s AI Training Proposal

Q: Which companies would be affected by this proposal?
A: The proposal would affect all AI companies training models on copyrighted content, including OpenAI, Google, Microsoft, and other major players operating in India.

Q: Who proposed this framework?
A: An eight-member committee formed by the Indian government in late April, operating under the Department for Promotion of Industry and Internal Trade.

Q: What is Nasscom’s position?
A: Nasscom, India’s technology industry body, has filed a formal dissent arguing for a text-and-data-mining exception instead of mandatory licensing.

Q: How would royalties be distributed?
A: Through a central collecting body composed of rights-holding organizations that would distribute payments to creators based on usage.

Q: What happens if companies don’t comply?
A: The framework would establish legal requirements, with non-compliance potentially leading to legal action and restrictions on operating in India.

The Bottom Line: A Watershed Moment for AI Governance

India’s proposal represents a watershed moment in the global debate over AI ethics, copyright, and fair compensation. By taking a more interventionist approach than Western counterparts, India is positioning itself as a potential leader in establishing balanced frameworks that protect creators while enabling innovation. The outcome of this proposal could set precedents that ripple across global markets, influencing how AI companies everywhere approach training data and creator compensation.

The coming months will be crucial as stakeholders weigh in during the consultation period. What emerges could either become a model for other nations or face significant modification based on industry pushback. One thing is certain: the rules of AI training are being rewritten, and India is holding the pen.

To learn more about the latest AI policy trends and how they’re shaping global markets, explore our comprehensive coverage of key developments in artificial intelligence regulation and innovation.