India is set to introduce a pioneering mandatory royalty system for artificial intelligence (AI) companies, requiring them to compensate creators for using copyrighted content to train their models. This significant move, which could redefine operations for major players like OpenAI and Google in one of the world's fastest-growing AI markets, aims to establish a clear framework for intellectual property in the age of generative AI.
The Department for Promotion of Industry and Internal Trade recently unveiled a proposed framework that would grant AI companies broad access to copyrighted works for training purposes. In return, these firms would pay royalties into a new central collecting body, composed of rights-holding organizations, which would then distribute payments to individual creators. Proponents argue this "mandatory blanket license" would streamline compliance for AI developers while ensuring fair compensation for writers, musicians, artists, and other rights holders whose work is scraped for commercial AI training.
India's initiative emerges amidst escalating global concerns and numerous lawsuits in the U.S. and Europe regarding AI companies' use of copyrighted material. While courts and regulators elsewhere grapple with defining "fair use" in AI training, leaving firms in a state of legal uncertainty, India is proposing one of the most proactive and interventionist approaches yet. Unlike the U.S. and the European Union, which are debating transparency and fair-use boundaries, India's model offers automatic access to copyrighted material in exchange for mandatory payment.
An eight-member government committee, formed in late April, developed this system, asserting it would prevent years of legal ambiguity and guarantee immediate compensation for creators. In a detailed 125-page submission, the committee highlights that a blanket license would provide "easy access to content for AI developers," reduce transaction costs, and "ensure fair compensation for rightsholders," deeming it the least burdensome method for managing large-scale AI training. The proposed "single window" collecting body would also eliminate the need for individual negotiations, facilitating royalty distribution to both registered and unregistered creators.
The committee also underscored India's burgeoning importance as a market for GenAI tools, citing OpenAI CEO Sam Altman's observation that India is the company's second-largest market after the U.S. and "may well become our largest." This growing market, coupled with AI firms' reliance on Indian creators' work, justifies a portion of that value flowing back to the creators, forming the basis of a "balanced framework" for compensation. This proposal lands amid intensifying legal battles worldwide, including an Indian news agency suing OpenAI in the Delhi High Court for unauthorized use of its articles. Courts in the U.S. and Europe are confronting similar disputes, with creators alleging tech companies have built their models on unlicensed content.
Industry Pushback and Dissent
The proposal, however, has not been met with universal approval. Nasscom, a prominent industry body representing tech giants including Google and Microsoft, has formally dissented. Nasscom advocates for a broad text-and-data-mining (TDM) exception, which would permit AI developers to train on copyrighted content as long as it's lawfully accessed. The organization warned that a mandatory licensing regime could stifle innovation and suggested that rights holders who object should have an opt-out mechanism rather than forcing companies to pay for all training data.
Similarly, the Business Software Alliance (BSA), representing global tech firms like Adobe, Amazon Web Services, and Microsoft, urged the Indian government to avoid a purely licensing-based system. The BSA argued that "relying solely on direct or statutory licensing for AI training data may be impractical and may not yield the best outcomes," cautioning that limiting AI models to smaller, licensed datasets could diminish model quality and exacerbate biases.
Committee's Hybrid Model and Next Steps
The committee, however, dismissed both a broad TDM exception and an opt-out model, contending that such systems either undermine copyright protections or are impractical to enforce. Instead, it put forward a "hybrid model" that combines automatic access to all lawfully available copyrighted works with the mandatory payment of royalties into the central collecting body for distribution to creators.
The Indian government has now opened the proposal for public consultation, allowing companies and other stakeholders 30 days to submit their feedback. Following this review, the committee will finalize its recommendations before the framework is presented to the government for adoption. OpenAI and Google have not yet responded to requests for comment on the proposal.
