Balancing Innovation & Accountability: Rethinking AI Governance In India
As artificial intelligence (AI) progresses and becomes increasingly embedded in our lives, there is no going back to a world without it. AI now influences almost every aspect of society, raising complex questions around safety, ethics, and social equity. The recent governance crisis at OpenAI has reignited debate on a key issue: how can institutions encourage innovation while ensuring the benefits of AI are widely shared?
OpenAI’s experiment with a Public Benefit Corporation (PBC) model offers an example worth considering, particularly as India advances its AI journey.
The Resource-Intensive Nature of AI Development
Developing cutting-edge AI is not like conventional software work. It is highly resource-intensive, requiring access to costly hardware such as Graphics Processing Units (GPUs), enormous energy, vast amounts of training data, and the recruitment and retention of frontier AI talent, which is currently scarce. This is why AI has become a demanding and high-stakes field.
Simultaneously, AI tools are becoming pervasive in public life. They act as coding assistants, information search tools, therapy providers, medical treatment advisers, credit eligibility assessors, student learning aides, and more.
Mistakes or unchecked use can cause real harm. This creates a tension: AI companies require financial strength to develop advanced systems, yet they also carry a public responsibility because of the influence their tools exert on people and institutions. This dual nature of AI raises a critical question for India: how can AI start-ups and innovators grow and attract capital while remaining accountable to society?
Challenges In Scaling Purpose-Driven AI In India
India’s corporate framework provides several pathways for innovation, though each has limitations for purpose-driven AI. Many private enterprises operate as private companies under the Companies Act, 2013, with the primary objective of maximizing shareholder returns. While many founders act responsibly, the law does not require consideration of broader societal impact.
Charitable and non-profit entities defined under Section 8 of the Companies Act, 2013, contribute to societal equity in education, healthcare and rural development. However, they cannot raise private capital through equity, making them unsuitable for scaling AI ventures that require significant long-term investment and frontier AI talent.
Corporate Social Responsibility (CSR) obligations for companies above a certain size have led to impactful programmes, but CSR is often treated separately from core business operations due to shareholder pressures and does not influence how the business itself is run. While these structures are useful, they do not fully address the complex needs of AI businesses.
The Public Benefit Corporation (PBC) Model
In the United States, some companies choose to operate as Public Benefit Corporations (PBCs), which may provide a potential solution. A PBC is a legal entity that allows a company to pursue profit while contributing to a clear societal mission, which is included in its founding documents and reported on regularly. This ensures society becomes a formal stakeholder alongside profit, unlike conventional models.
Directors of such entities can prioritize the mission in shareholder discussions, balancing the interests of shareholders with those of employees, customers, and the broader community. For example, OpenAI, operating under a capped-profit structure and transitioning to a PBC, raises external funding while remaining anchored to its original mission of ensuring AI benefits all of humanity.
Balancing Profit & Public Purpose In AI Governance
The PBC model allows the private sector to pursue broader public goals if the right structure is in place. PBCs such as Kickstarter and Patagonia have demonstrated that commercial success can coexist with public mission alignment. The idea has become a global phenomenon. Italy’s Societa Benefit, Canada’s Benefit Companies, and the UK’s Community Interest Companies are a few examples, with many countries adopting similar legal frameworks that blend profit with public purpose. B Corp certification also evaluates companies’ commitment to responsible practices.
Collectively, these examples show that businesses can thrive while placing society first.
India has already shown the potential of mission-driven digital platforms such as Aadhaar, UPI, and DigiLocker, which have transformed access to services and created substantial public value. These initiatives, however, were largely government-led. As AI innovation increasingly shifts to the private sector, India could benefit from a new corporate form that encourages responsible business from inception, akin to a PBC.
Opportunities for the Future
Such a structure could allow for-profit companies to pursue a clear social objective in their charter, such as improving inclusiveness in healthcare and education or supporting climate-resilient agriculture while operating as regular businesses. These entities would be required to publish an annual impact report outlining progress on their public mission. Boards would need to consider public impact alongside shareholder value, creating opportunities for mission-aligned investors, philanthropic capital, and state support under initiatives such as IndiaAI.
Adopting a PBC-like model could help India avoid the trade-off between innovation and inclusion. Government could consider regulatory sandboxes to pilot such structures. These firms could be eligible for special incentives, similar to green bonds or social impact investments available in other sectors. Over time, a strong ecosystem of benefit-driven AI firms could position India as a leader in inclusive innovation.
India has the opportunity to design thoughtful governance frameworks from which other nations could learn. Policymakers, business schools, law schools, and engineering institutions can integrate modules on responsible AI and benefit-first corporate design. Establishing a legal framework that supports innovation while keeping society at the centre would be a timely, forward-looking step, ensuring equitable access to AI benefits and potentially becoming one of India’s most significant innovations.
