India has proposed a compulsory royalty system for AI corporations that train their models on copyrighted content — a move that would reshape how OpenAI and Google operate in what has already grow to be considered one of their most significant and fastest-growing markets globally.
On Tuesday, India’s Department for Promotion of Industry and Internal Trade released a proposed framework that might give AI corporations access to all copyrighted works for training in exchange for paying royalties to a brand new collecting body composed of rights-holding organizations, with payments then distributed to creators. The proposal argues that this “mandatory blanket license” would lower compliance costs for AI firms while ensuring that writers, musicians, artists, and other rights holders are compensated when their work is scraped to coach business models.
India’s proposal comes amid mounting concerns in global markets over how AI corporations train their models on copyrighted material, a practice that has triggered lawsuits from authors, news organizations, artists, and other rights holders within the U.S. and Europe. Courts and regulators are still weighing whether such training qualifies as fair use, leaving AI firms operating under legal uncertainty and allowing them to rapidly expand their business without clear regulations.
Unlike the U.S. and the European Union, where policymakers are debating transparency obligations and fair-use boundaries, India is proposing one of the interventionist approaches yet by giving AI corporations automatic access to copyrighted material in exchange for mandatory payment.
The eight-member committee, formed by the Indian government in late April, argues the system would avoid years of legal uncertainty while ensuring creators are compensated from the outset.
Defending the system, the committee says in a 125-page submission (PDF) that a blanket license “goals to offer an easy accessibility to content for AI developers… reduce transaction costs… [and] ensure fair compensation for rightsholders,” calling it the least burdensome technique to manage large-scale AI training. The submission adds that the one collecting body would function as a “single window,” eliminating the necessity for individual negotiations and enabling royalties to flow to each registered and unregistered creators.
The committee also points to India’s growing importance as a marketplace for GenAI tools. Citing OpenAI CEO Sam Altman’s remark that India is the corporate’s second-largest market after the U.S. and “could grow to be our largest,” it argues that because AI firms derive significant revenue from Indian users while counting on Indian creators’ work to coach their models, a portion of that value should flow back to those creators. That, it says, is an element of the rationale for establishing a “balanced framework” that guarantees compensation.
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India’s proposal lands amid intensifying legal battles worldwide over whether AI corporations can lawfully use copyrighted material to coach their models.
In India, news agency ANI sued OpenAI within the Delhi High Court, arguing its articles were used without permission — a case that has prompted the court to look at whether AI training is itself an act of reproduction or protected by “fair dealing.” Courts within the U.S. and Europe are confronting similar disputes, with creators alleging that tech corporations have built their models on unlicensed content.
AI proposal sees pushback and dissent
Not everyone seems to be convinced by the Indian government’s proposed model, though.
Nasscom, the industry body representing technology firms including Google and Microsoft, filed a proper dissent arguing that India should as an alternative adopt a broad text-and-data-mining exception that might allow AI developers to coach on copyrighted content so long as the fabric is lawfully accessed. It warned that a compulsory licensing regime could slow innovation and said rightsholders who object must be allowed to opt out fairly than force corporations to pay for all training data.
The Business Software Alliance, which represents global tech firms including Adobe, Amazon Web Services, and Microsoft, pressed the Indian government to avoid a purely licensing-based regime. It urged India to introduce an explicit text-and-data-mining exception, arguing that “relying solely on direct or statutory licensing for AI training data could also be impractical and will not yield one of the best outcomes.”
Limiting AI models to smaller sets of licensed or public-domain material, BSA warned, could reduce model quality and “increase the danger that outputs simply reflect trends and biases of the limited training data sets,” adding that a transparent TDM exception would higher balance innovation and rights holders’ interests.
The committee didn’t consider each a broad text-and-data-mining exception and an opt-out model, arguing that such systems either undermine copyright protections or are unimaginable to implement. As an alternative, it proposed a “hybrid model” that might grant AI firms automatic access to all lawfully available copyrighted works while requiring them to pay royalties into the central collecting body that distributes the proceeds to creators.
The Indian government has now opened the proposal for public consultation, giving corporations and other stakeholders 30 days to submit their comments. After reviewing the feedback, the committee will finalize its recommendations before the framework is taken up by the federal government.
OpenAI and Google didn’t reply to requests for comments.