An Indian government panel has recommended a major shift in how artificial intelligence companies access and use copyrighted material, proposing a mandatory royalty system that would require platforms such as OpenAI and Google to pay creators when their work is used to train AI models. The proposal, released on Monday, challenges the long-standing argument by AI firms that publicly available online content can be scraped freely under the principle of “fair use.”
The recommendation signals a new phase in the global debate over how to balance innovation with the rights of creators, at a time when governments worldwide are scrambling to update copyright rules for the AI era.
A Royalty Pool for Creators
The panel, constituted in April, said AI developers should continue to have access to Indian-created content but must pay royalties into a central body representing copyright owners. Creators would then be eligible to claim compensation when their work is found to be part of AI training datasets.
This marks a departure from the approach taken in jurisdictions such as the United States, where major AI companies argue that training on publicly available content does not require a licence or payment. India’s proposed model also goes beyond the European Union’s “opt-out” provision, which allows creators to exclude their work from AI datasets. According to the panel, opt-out systems place an unreasonable burden on creators, who would be expected to identify their material in vast, opaque training datasets.
A Growing Regulatory Divide
Globally, governments are taking markedly different approaches to AI-related copyright concerns. Japan has given developers broad exemptions that allow the use of copyrighted material in training without explicit permission. The European Union, by contrast, has introduced tougher safeguards and disclosure obligations.
India’s proposal places it closer to the EU in tightening oversight, but goes a step further by treating creator compensation as mandatory rather than optional.
Industry Pushback and Legal Tensions
The recommendation comes as disputes between AI firms and content owners intensify. OpenAI is already facing a lawsuit from Indian news agency ANI over alleged misuse of copyrighted content—an accusation the company denies, maintaining that its model training practices fall under fair use.
Tech industry groups have begun registering their objections. Nasscom, whose membership includes global giants such as Google and Microsoft, formally dissented during consultations, arguing that a compulsory fee would function as a “tax or levy on innovation” and could hinder India’s growing AI ecosystem. The Motion Picture Association, representing companies including Netflix and Paramount, has also argued against major changes to India’s copyright law, saying licensing frameworks—not new levies—should be the focus.
Next Steps and Public Consultation
The government has opened a 30-day window for industry groups, creators and the wider public to comment on the proposal. After the consultation period, officials will decide whether to adopt, modify or discard the panel’s recommendations.
If implemented, India’s plan would significantly reshape how AI platforms operate in one of their largest and fastest-growing user markets—potentially setting a precedent for other countries wrestling with similar copyright challenges.