Artificial Intelligence and Other Emerging Tech
Description: This issue brief presents an updated analysis of India’s regulatory and tax policies for Virtual Digital Assets (VDAs), expanding on the Esya Centre report, ‘Taxes and Takedowns: An Assessment of India’s Key Policy Tools for Virtual Digital Asset Markets’ (Gautam and Sharma 2024).
Attribution: Esya Centre. The Impact of India’s VDA Tax Policy: An Update. Special Issue, No. 214. December 2024.
Description: This report offers a detailed analysis of global AI governance standards, particularly the AI Risk Management Framework (AI RMF) by NIST and ISO 42001:2023. It critiques these international frameworks for being overly generalized, focusing on their "one-framework-fits-all" approach, which may not adequately address the diverse applications and contexts of AI technologies. The report advocates for a tailored approach to AI governance in India, moving away from broad frameworks to more specific, context-driven standards.
Attribution: Meghna Bal. Drafting Standards for AI Systems: Critiques of International Approaches and Recommendations for India. October 2024, Esya Centre.
Description: As AI systems become more pervasive, the question of liability for AI-related harms becomes increasingly critical. This paper attempts to address the questions surrounding the creation of liability rules around AI technologies. Specifically, it tries to tackle the debate on whether AI systems merit the blanket application of strict liability rules or a more contextualized and targeted framework.
Attribution: Meghna Bal and N S Nappinai. Crafting a Liability Regime for AI Systems in India. September 2024, Esya Centre and Cyber Saathi Foundation.
Description: Stablecoins are a distinct class of virtual digital assets (VDAs) backed by fiat currencies, commodities, or other assets. They aim to maintain a stable value, thereby distinguishing them from other VDAs. The increasing prominence of stablecoins, especially in developing economies like India, necessitates the development of a balanced regulatory framework to leverage their potential while addressing associated risks. In light of the current absence of stablecoin-specific regulations in India, this document proposes a four-step process for developing a comprehensive regulatory framework.
Attribution: Mohit Chawdhry. Towards a Stablecoin Regulatory Framework in India. August 2024, Esya Centre.
Description: In recent years, several surveys have been conducted to understand the demographic characteristics of crypto-asset users and their motivations for adoption. However, a holistic assessment of user investment portfolios that encompass the various instruments in the crypto space, alongside traditional financial instruments, is lacking. This report attempts to fill this gap by analysing user engagement with assets like gold, equity/stocks, bonds, mutual funds, and cryptoassets of various types (i.e. unbacked cryptoassets such as Bitcoin and Ethereum, nonfungible tokens or NFTs and stablecoins).
Attribution: Vikash Gautam. User Engagement in Traditional Financial, Crypto, and Stablecoin Markets in India. July 2024, Esya Centre.
Description: This paper explores the academic perspectives and international developments around permitting AI inventorship. The paper defines AI-assisted inventions as inventions where a human uses AI technology to assist the inventive process. Additionally, if the AI system autonomously creates inventions without any human intervention, they are called AI-generated inventions.
Attribution: Akanksha Dutta. Inventorship of AI-Assisted Inventions. Policy Brief Issue No. 211, June 2024, Esya Centre.
Description: This report examines the ecosystem impact of the blocking of the Uniform Resource Locator (URL) of nine foreign virtual digital asset (VDA) exchanges in January 2024. These exchanges saw large increases in trading volumes following the changes in the VDA tax architecture announced in the 2022-23 Union Budget. This report therefore examine whether the blocking managed to stem this offshoring, to assess its effectiveness as a policy lever to ensure compliance with local laws for areas like taxation and anti-money laundering.
Attribution: Dr. Vikash Gautam and Tamanna Sharma. Taxes And Takedowns: An Assessment Of India’s Key Policy Tools For Virtual Digital Asset Markets. Issue No. 042, May 2024, Esya Centre.
Description: Generative AI, known for its ability to generate new content and insights, is reshaping the landscape of human-computer interaction and decision making. Alongside its many benefits, however, generative AI presents unique challenges, particularly in terms of its differentiated impact on people of different genders. This paper seeks to understand how gender bias manifests across the value chain of generative AI, through a comprehensive review of academic work and reports by international organizations. It makes recommendations for policymakers, developers, and deployers for mitigating gender bias and reducing the bias-related harms that emanate from generative AI.
Attribution: Meghna Bal, Mohit Chawdhry and Noyanika Batta. A Literature Review on Gender Bias in Generative AI: Implications for India and Recommendations for the Way Forward. April 2024, Esya Centre.
This report examines the impact of generative AI on research ethics. We are rapidly heading towards a scenario where generative AI tools, such as OpenAI’s ChatGPT, play a crucial role in academic research. From conducting literature reviews and framing hypotheses to drafting surveys, generative AI-based applications can revolutionise each aspect of the academic research process.
This paper is an updated analysis of the impact of the 1% tax deducted at source (TDS) on trading in crypto assets (referred to as VDAs – virtual digital assets – in the Indian Income Tax Act 1961) introduced in India in 2022. The 1% TDS levy seems intended to discourage speculative activity and increase traceability in the VDA ecosystem.
G20 Digital Asset Regulation Tracker: To trace developments in the rapidly evolving field of digital asset regulation, the Esya Centre created the Digital Asset Regulation Tracker. The tracker provides an overview of the status of digital asset regulation in G20 nations. The idea is to create a ready reckoner for stakeholders interested in digital asset regulation in G20 countries.
Description: The clarion call for the regulation of artificial intelligence (AI) is growing louder across the world. Different jurisdictions have either introduced legislation to regulate the technology or are in the process of doing so. Aside from hard-coded laws, a bevy of voluntary standards have emerged around trust and safety concepts surrounding the deployment and development of AI. This paper presents a roundup of different approaches to AI regulation and governance, as well as the intersection of existing legal doctrines and AI. The purpose of this paper is to put forth considerations for Indian policymakers to take into account when deciding on AI governance down the road.
Attribution: Meghna Bal and Vivan Sharan. Navigating Approaches to AI Governance: Charting a Pathway for India. August 2023, Esya Centre.
Description: The World Economic Forum defines Web3 as a growing segment of decentralised technologies that help “establish provenance, veracity, and value of data.” Web3 technologies, which include cryptography, distributed ledger systems, smart contracts and fungible and non-fungible digital assets, aim to redress the centralisation of data, with large Web2 internet companies, by returning ownership and control to users. This paper argues that the digital product aspect of Web3 should be regulated under a specialised intermediary liability framework targeting centralised Web3 or Web2.5 entities. Such a framework would ensure Web3 digital product risk redressal, while still enabling entrepreneurs to innovate.
Attribution: Meghna Bal and Mohit Chawdhry. Why India Needs an Intermediary Liability Framework for Web3 and What it Should Look Like. August 2023, Esya Centre.
Description: The Ministry of Electronics and Information Technology (‘MeitY’) released proposed amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“Rules”) on 2nd January 2023. The draft amendments bring online games and online gaming intermediaries within the scope of the 2021 Rules. The draft amendments establish a self-regulatory framework for online gaming. The adoption of a self-regulatory framework for online gaming reflects an emerging consensus on the suitability of industry self-regulation for digital technologies.
Self-regulation is preferred in digital industries as it tends to be more agile and responsive to technological change than government regulation. In response we put together a template code of conduct to provide a framework that self-regulatory bodies can adopt to govern their functioning.
Attribution: Code of Conduct Template for Self-Regulatory Bodies in Online Gaming. Issue No. 106, February 2023, Esya Centre.
In a recently published Esya Centre report “Virtual Digital Asset Tax Architecture in India: A Critical Examination”, we show that the main (unintended) impact of the tax policy on Indian VDA industry is offshoring of domestic business and liquidity to foreign exchanges. This report, extends the earlier work by examining – how the tax architecture changed the risk exposure of investors trading on centralised VDA exchanges in the country.
Description: This report is the first empirical exercise to estimate the impact of India’s tax policy on centralised Virtual Digital Asset (VDA) exchanges, that are similar to stock exchanges for digital assets. It examines the impact of three events on the centralised virtual digital asset (VDA) industry in India, announced on 1st February 2022 during the Union Budget 2022-23: (a) a levy of a flat 30 percent tax on gains from VDA trade applicable from 1st April 2022; (b) a levy of 1 percent tax deducted at source (TDS) on transactions above INR 10,000 from 1st July 2022; and (c) the provision disallowing the offsetting of losses applicable from 1st April 2022s.
Attribution: Dr. Vikash Gautam. Virtual Digital Asset Tax Architecture in India: A Critical Examination. Special Issue No. 208, January 2023, Esya Centre.
Description: This paper examines the price discovery mechanism of non-fungible tokens, or NFTs. That is, how do the forces of supply and demand determine an NFT transaction? We use data on some 55,000 unique NFTs with 16,000 creators/artists, and 15,000 collectors/buyers on Foundation, one of the largest NFT exchange platforms, to address this question.
Attribution: Dr Vikash Gautam and Tamanna Sharma. Price Discovery in the NFT Market. December 2022, Esya Centre.
Description: This report explores how immersive technologies will change the way creators produce content and audiences consume it.. The report also assesses the readiness and competitiveness of India’s AR/VR industry and suggests some policy measures that could further bolster the sector based on insights from semi-structured interviews with relevant stakeholders in the AR/VR ecosystem.
Attribution: Vani Tripathi Tikoo, Akshat Agrawal, Varun Kakar, Mohit Chawdhry and Vaishnavi Prasad. Market Study on Immersive Technologies in India: Propelling the AVGC Sector. November 2022, Esya Centre.
Synopsis: The Indian Government recently announced that it will introduce the Digital India Act, a new information technology law, that will replace the Information Technology (IT) Act, 2000. Reports indicate that the new legislation will focus on engendering greater “openness, safety, trust and accountability” in the digital economy. The emphasis on accountability possibly means a recasting of the intermediary liability regime, to place greater responsibility on the shoulders of digital businesses. Indeed, it is important to introduce measures that enable the State to safeguard public interest and rights online. However, it is also important that in a bid to usher in greater liability for digital businesses, decisionmakers do not compromise on economic goals, such as the target of a trillion-dollar digital economy by 2025.
This report argues that the goals of achieving economic growth and addressing public interest concerns online are not mutually exclusive. Specifically, it lays out principles and objectives that will enable the Digital India Act to improve enforcement capabilities in the online realm and also grant digital businesses greater regulatory certainty – an important consideration for technological and economic progress.
Attribution: Meghna Bal. Roadmap for a Future-Ready Digital India Act. September 2022, Esya Centre.
Synopsis: With virtual reality set to take over the internet, the virtual worlds we have seen so far will be transformed beyond recognition. But what exactly is the metaverse? What will it look like? What are the opportunities and challenges it poses? What is the future of the metaverse in India? This report attempts to answer some of the questions that lie at the heart of this technology.
Attribution: Noyanika Batta. The Metaverse Primer: A Technological and Legal Overview From an Indian Perspective. September 2022, Esya Centre.
