AI Royalty Rule: India Targets Big Tech With Bold New Proposal

India has introduced a sweeping proposal that could change how the world’s largest AI companies train their models — and how creators are compensated. The plan, centered on a mandatory AI royalty rule, aims to answer growing search questions such as “Will AI companies have to pay for copyrighted training data?” and “How will India regulate OpenAI and Google?” within the first few lines. As global concerns about AI training practices intensify, India is positioning itself as one of the first major markets to push for a structured, enforceable payment system for copyrighted content. The proposal signals a major shift for both creators and tech giants operating in the country’s fast-expanding AI ecosystem.

India Proposes Mandatory Payments for AI Training on Copyrighted Content

India’s Department for Promotion of Industry and Internal Trade has released a new draft framework that would require AI companies to pay royalties for training models on copyrighted material. The proposal introduces a “mandatory blanket license” that gives AI developers access to all copyrighted works in exchange for paying into a centralized royalty collection body. This system is designed to reduce compliance complexities for AI firms while ensuring creators—from authors to musicians to digital artists—are compensated when their content is scraped for commercial AI training. The shift marks one of India’s most proactive attempts to balance innovation with creator rights in an era where AI relies heavily on large-scale data ingestion.

Why India Is Taking an Interventionist Approach to AI Regulation

While other regions continue debating what counts as fair use in AI training, India’s proposal takes a more assertive stance. Countries like the U.S. and those in the European Union remain locked in legal battles and regulatory negotiations, leaving creators and developers in prolonged uncertainty. India, however, is choosing to bypass these disputes by offering AI companies automatic access in exchange for mandatory payment. This interventionist approach aims to eliminate ambiguity, prevent years of litigation, and create a predictable commercial environment for AI firms. For a nation rapidly expanding its tech sector, the clarity could attract long-term investment while strengthening protections for rights holders.

How the Royalty System Would Work for OpenAI, Google, and Other Developers

Under the proposed framework, AI firms such as OpenAI and Google would be granted legal permission to train on copyrighted datasets without individually negotiating licenses. The royalty payments would flow to a newly established collecting society made up of organizations representing authors, artists, publishers, and other rights holders. The committee behind the framework argues that this model mirrors successful systems already used in music and broadcast industries. By consolidating licensing under one umbrella, the government hopes to reduce friction between creators and tech companies while ensuring financial returns are distributed fairly and efficiently.

A Growing Global Debate Over AI, Copyright, and Fair Use

India’s proposal lands at a moment when AI training practices are facing unprecedented scrutiny worldwide. In markets like the U.S. and Europe, lawsuits from news organizations, authors, and visual artists accuse AI companies of scraping copyrighted works without authorization. Courts are still deciding whether such use qualifies as fair use or copyright infringement. As a result, companies like OpenAI and Google continue to operate in an environment without clear legal boundaries. India’s decisive move to implement a structured royalty system could influence global conversations about how creators should be compensated in the age of generative AI.

Why Creators Are Pushing for Compensation as AI Usage Accelerates

Behind India’s proposal is a growing chorus of creators expressing concern over unauthorized data scraping. Writers, musicians, filmmakers, and digital artists have argued that their work fuels AI models’ abilities while providing them no financial benefit. With generative AI outputs increasingly competing with original creative work, demands for compensation have intensified. India’s royalty-based model could serve as a blueprint for countries exploring how to restore balance between creators’ rights and the commercial use of their content. If implemented successfully, it could help resolve longstanding tensions between tech innovation and intellectual-property protections.

India’s AI Market Has Become a Crucial Battleground for Tech Giants

OpenAI, Google, and other major AI players consider India one of their fastest-growing markets, with adoption rising across education, finance, health, and enterprise services. The scale of the market means that any regulatory shift carries significant weight for global business strategies. Mandatory royalties could increase operational costs for AI firms, but they also offer a clear legal pathway to train on vast amounts of local content. As India continues positioning itself as a global AI hub, its policies could shape how the next decade of AI innovation unfolds in emerging markets.

Government Committee Says the System Could Prevent Years of Legal Uncertainty

The eight-member committee responsible for the proposal believes that delaying regulation could lead to years of unresolved lawsuits and stalled innovation. By establishing a blanket license, India hopes to create an environment where AI companies can operate without fear of retroactive legal challenges. This proactive strategy also aims to strengthen the country’s creative economy by guaranteeing that rights holders benefit financially from the AI boom. The committee argues that the clarity provided by the new system will encourage both domestic startups and global AI leaders to innovate responsibly.

Potential Challenges: Enforcement, Distribution, and Industry Pushback

Despite its ambitious goals, India’s framework faces several challenges. Ensuring accurate royalty distribution across diverse creative sectors could be complex, especially when AI training involves billions of data points. AI companies may also resist mandatory fees, arguing that broad licensing could slow innovation or create financial barriers for smaller developers. Additionally, verifying the extent of copyrighted data used in training remains a technical challenge worldwide. How India addresses these issues will determine whether the policy becomes a global benchmark or a regulatory cautionary tale.

Could India Set a Global Standard for AI Licensing?

As countries race to regulate AI, India’s proposal stands out for its decisiveness and simplicity. If implemented, the system could influence how governments worldwide address the intersection of copyright and AI. A clear, enforced royalty model may offer a middle path between unrestricted data scraping and overly restrictive copyright laws. For creators, it represents a long-awaited opportunity for compensation. For tech companies, it provides a predictable framework to innovate without legal uncertainty. The world will be watching closely as India finalizes the proposal and begins the process of turning it into binding regulation.