Ethics and Governance in AI adoption for Indian Businesses

Source: Dev.to

India stands at the threshold of an artificial intelligence revolution. With 59 % of Indian organisations actively deploying AI—outpacing markets such as Singapore, the UAE, and China—the nation is a frontrunner in technological innovation. According to IBM’s Global AI Adoption Index, India ranks among the top three countries worldwide in AI implementation, surpassing traditional technology powerhouses.

The PHD Chamber of Commerce and Industry (PHDCCI), representing over 150,000 businesses across diverse sectors, notes that rapid AI adoption brings both tremendous opportunities and significant ethical challenges. As India’s AI market accelerates toward a projected 25‑35 % CAGR through 2027, robust ethics and governance frameworks are increasingly critical.

Impressive Growth Trajectory

• 73 % of Indian businesses plan to increase AI applications by 2025, well above the global average of 52 %.
• Leading sectors: Banking, Financial Services and Insurance (BFSI), Consumer Packaged Goods (CPG), and retail.
• 30 % of organisations cite limited AI skills and expertise.
• 27 % find AI projects too complex to integrate and scale effectively.

These challenges underscore the need for comprehensive governance frameworks to guide ethical AI implementation.

Understanding the Ethical Dimensions of AI

• AI systems trained on historical data often perpetuate existing societal biases.
• Most AI datasets originate in Western contexts and are created predominantly by specific demographic groups, leading to a mismatch when applied to India’s diverse population.
• The Ministry of Electronics and Information Technology (MeitY) requires AI models to be stripped of bias and discrimination, yet implementation remains challenging.

Data Privacy

• Massive datasets are essential for AI training and operation, making data privacy a paramount concern.
• The absence of a comprehensive AI‑specific regulatory framework intensifies worries about privacy violations.
• Indians lost close to ₹7,000 crore to online scams in the first five months of 2025, highlighting the urgent need for stronger protections.

Transparency and Explainability

• Determining accountability for AI‑driven decisions is complex.
• When autonomous systems cause harm or make errors, it is unclear whether responsibility lies with the developer, the deployer, or the organisation using the AI.
• India’s current legal framework does not adequately address these accountability concerns.

Job Displacement and Workforce Transformation

• AI adoption will reshape job roles, requiring reskilling and upskilling of the workforce.
• Organizations must plan for AI‑augmented roles rather than viewing AI solely as a replacement technology.

India’s Evolving AI Governance Framework

IndiaAI Mission (2024)

• Backed by over ₹10,300 crore (≈ $1.24 billion) in funding over five years.
• Encompasses seven pillars; “Safe and Trusted AI” is a central component.
• Emphasises safety, accountability, and ethical practices in AI development and deployment.

India AI Governance Guidelines (November 2024)

Unveiled by MeitY, the guidelines provide:

1. Seven guiding principles (Sutras) for ethical and responsible AI.
2. Risk‑Based Classification – AI systems are categorized by potential impact; high‑risk applications in finance, healthcare, and hiring receive stricter oversight.

The Chamber’s Commitment to Responsible Innovation

Capacity‑Building Programs

• In November 2024, PHDCCI organized an immersive workshop on “AI Tools for Everyday Business,” training 50 delegates from diverse sectors in ethical AI implementation.
• The workshop highlighted AI’s transition from an emerging trend to an essential business necessity that must be adopted responsibly.

Industry‑Government Collaboration

• PHDCCI’s conference on “Harnessing AI to Combat Frauds and Counterfeits in Retail & E‑commerce” brought together government leaders, industry experts, and technology specialists.
• The event demonstrated how proper governance enables AI to act as a “first line of defense” against fraud, detecting irregularities beyond human oversight.

PHDCCI’s Framework for Ethical AI Adoption

• Establish Clear Governance Structures – Define accountability frameworks for AI deployment.
• Robust Data Encryption and Security Measures.
• Invest in Diverse, Representative Training Datasets.
• Develop Clear Documentation of AI system capabilities and limitations.
• Upskill Existing Workforce for AI‑augmented roles.

Implementation Roadmap for Indian Businesses

1. Leverage industry frameworks developed by NASSCOM, NITI Aayog, and MeitY.
2. Partner with educational institutions for talent development.
3. Adopt data standardization practices.
4. Follow the India AI Governance Guidelines.
5. Build consumer trust through transparent, ethical AI practices, fostering lasting customer relationships.

Source: PHDCCI Blog – Ethics and Governance in AI Adoption for Indian Businesses