Time to build deep, product-driven AI startups from India: MeitY Startup Hub CEO
India's AI initiatives need regulatory sandboxes and a long-term perspective to succeed. Emphasizing R&D-led innovation is crucial for sustainable progress. By shifting focus away from short-term gains, India can develop AI technologies that are resilient and impactful. Regulatory sandboxes can provide a controlled environment for testing and refining new ideas. This approach can help India build a strong foundation for long-term success in AI.
India’s AI innovation ecosystem could benefit from a sandboxing framework similar to the one used in the financial sector, according to Panneerselvam Madanagopal, CEO of the Ministry of Electronics and Information Technology (MeitY) Startup Hub. In the policy and regulatory context, sandboxing refers to a controlled environment where emerging technologies can be tested under real-world conditions, but with regulatory oversight and safeguards. The goal is to allow startups to innovate without being immediately subject to full-scale legal and compliance requirements—while still upholding consumer protection, data security, and ethical standards.
Regulatory Sandboxes in the Financial Sector
Previously, the Reserve Bank of India (RBI) introduced regulatory sandboxes to spur innovation in the financial sector—covering areas such as digital banking, payments, lending, and financial inclusion—while managing systemic risk. These sandboxes allowed fintech startups to test new products or business models with a limited set of users under close regulatory supervision. At the same time, the RBI was able to observe emerging technologies and craft smarter, more adaptive regulations.
AI Sandbox Framework Proposal
Madanagopal, speaking at the Startup Mahakumbh in New Delhi, suggested a similar model could help drive India’s AI ambitions. “We’ve built amazing width, but now, it’s time to build depth—creating fundamentally strong, sustainable, product-driven companies from India," Madanagopal said at the Startup Mahakumbh in New Delhi. However, Madanagopal did not provide further details on whether the government intends to formally introduce a sandbox framework for AI. So far, the idea remains exploratory.
India’s Approach to AI Regulation
That uncertainty reflects a broader tension in India’s evolving approach to AI regulation. The government has oscillated between introducing formal regulations and promoting self-regulation for the sector. In January, the Ministry of Electronics and Information Technology (MeitY) released a report on developing AI governance guidelines. The recommendations reveal a dual approach—balancing the need for regulatory frameworks with the flexibility of self-governance.
Startup Culture and Long-Term Vision
Madanagopal emphasized that beyond policy architecture, a shift in startup culture is also essential. He called for founders to move away from the instant-gratification mindset that dominates much of the current startup landscape. He urged founders to embrace a longer-term vision rooted in research and development.
Under the IndiaAI Mission, which has a total financial outlay of ₹ 10,372 crore, ₹ 1,942.5 crore—or roughly 18.7%—has been earmarked for startup financing.