Regulatory Sandboxes Necessary to Foster AI Innovation
Regulatory sandboxes are essential for enabling startups and other innovators to develop new technologies within a controlled environment. This concept was emphasized by a senior official at the International Financial Services Centres Authority (IFSCA) during the India AI Impact Summit 2026.
Importance of Regulatory Sandboxes
According to the Chief Technology Officer of IFSCA, Joseph Joshy, regulatory sandboxes serve as “guardrails” that allow innovation to flourish without unnecessary constraints. He stated, “We need to ensure that there are regulatory sandboxes among regulators so that there are guardrails… so that before regulations come, startups and others can build things in a controlled environment.”
This approach is particularly vital in sectors where regulations are yet to be established. By providing a framework for innovation, regulatory sandboxes can help chart a path forward, ensuring that new ideas can be tested and refined safely.
Creating India-Specific AI Protocols
During the summit, Rangarajan V, Senior Vice President & Chief Digital Officer at Adani Defence and Aerospace, highlighted the need for India Context Protocols. These protocols would tailor AI solutions to the unique cultural and scientific landscape of India, ensuring that innovations are relevant and effective in the local context.
Infrastructure as Essential Commodity
Sunil Gupta, Co-Founder and CEO of Yotta Data Services, pointed out that digital infrastructure, including data centers and network capacities, should be regarded as essential commodities. He emphasized, “Compute infrastructure for AI is the most essential commodity,” underscoring the importance of robust technological foundations for AI development.
Regulatory Balance Between Risk and Innovation
Joseph Joshy further elaborated on the role of IFSCA as a regulator, noting that their primary focus is on market integrity and consumer protection. With the emergence of new AI models, there are potential systemic risks that must be managed. He remarked, “Regulations are not entity-based but activity-based,” indicating that both small startups and large corporations can have significant impacts through their innovations.
In conclusion, while the IFSCA does not aim to inhibit innovation, they seek to balance risk and innovation effectively. This approach will ensure that as new technologies emerge, they do so within a framework that protects consumers and maintains market stability.
