According to TechCrunch, India’s Department for Promotion of Industry and Internal Trade proposed a mandatory royalty system on Tuesday, which would force AI companies like OpenAI and Google to pay for training their models on copyrighted content. The framework would grant AI firms automatic access to all copyrighted works in exchange for paying royalties to a new central collecting body, which then distributes payments to creators. The proposal comes from an eight-member committee formed in late April, which argues this “mandatory blanket license” would lower compliance costs and ensure compensation. The committee cited OpenAI CEO Sam Altman’s remark that India is the company’s second-largest market after the U.S. and “may well become our largest.” The Indian government has opened the proposal for a 30-day public consultation before finalizing recommendations. This move comes as news agency ANI has sued OpenAI in the Delhi High Court over unauthorized use of its articles.
A Global Precedent in the Making
Here’s the thing: while the U.S. and EU are stuck in endless debates about “fair use” and transparency, India is basically trying to cut the knot. They’re proposing one of the most interventionist, straightforward approaches yet. Forget years of legal wrangling; just pay a fee into a collective pot, and you get a blanket license to train. It’s a huge gamble. On one hand, it provides the legal certainty that AI companies claim to crave. On the other, it establishes a direct cost of doing business that didn’t exist before. If this goes through, you can bet other large, creator-rich markets will look at this model very closely. It could become the blueprint for how the Global South handles Big AI.
The Industry Pushback Is Real
And the tech giants are, predictably, not thrilled. Nasscom, which reps Google and Microsoft, filed a formal dissent. Their preferred solution? A broad “text-and-data-mining” exception—basically, a legal free pass to train on any lawfully accessed content, with maybe an opt-out for rights holders. The Business Software Alliance (backed by Adobe, AWS, and Microsoft) echoed this, warning that a licensing-only regime is “impractical” and could hurt model quality by limiting training data. Their argument is that smaller, licensed datasets could bake in more bias. It’s a classic innovation-versus-compensation fight. The committee shot these ideas down, saying a broad exception undermines copyright and an opt-out is unenforceable. So we’re at a stalemate, with the Indian government holding the pen.
Winners, Losers, and the Value Chain
So who wins if this happens? Indian creators—writers, musicians, artists—could see a new, tiny revenue stream, which is more than they get now. The big loser, at least in the short term, is the profit margin for AI companies operating in India. A new mandatory cost center would eat into the revenue they derive from what they see as a massive growth market. But look, the committee has a point: these firms are making bank from Indian users while training on content from Indian creators. Is it really that radical to suggest some of that value should flow back? The real question is whether this system would be efficient or just another bureaucratic nightmare. A “single window” collecting body sounds great in a 125-page PDF, but making it work in practice is a whole other challenge.
What Happens Next
Now, the 30-day consultation period is key. Lobbying will be intense. We’ll see if OpenAI and Google break their silence with some public comments. The outcome will signal India’s entire philosophy toward tech sovereignty and generative AI. Will they side with the innovation argument from Nasscom and the BSA? Or will they prioritize creator rights and set up a compensation framework that could be copied worldwide? This isn’t just an Indian policy anymore; it’s a live test case for the world. The final recommendations, and whether the government acts on them, will ripple through every boardroom in Silicon Valley and every AI lab from here to Bangalore. You can follow the official process through the government’s press release portal. Buckle up.
