Authors: Akshatha ​​Allen G., Debolina Bhattacharyya, Sweta Tevatia.

Abstract:

This article aims to explore the multifaceted implications of Artificial Intelligence on India’s labor markets, intellectual property rights, and national security. The rapid growth of India’s AI market presents both opportunities and risks, including potential job displacement and challenges to existing policy frameworks. This paper underscores the urgent need for proactive policy interventions, such as ethical guidelines and contracts for AI deployment, revisions to intellectual property laws to address AI-generated content, and strategic integration of AI in defense to bolster national security.

Keywords:

Artificial Intelligence, Labour Markets, Creative Market, Intellectual Property Rights, National Security, Defence.

Introduction:

AI is a multi-purpose technology which penetrates all spheres of life, ranging from speech and image recognition, to spam filtering, logistics and diagnosing diseases, as well as the prediction of criminal behavior, and court decisions (Folberth et al., 2022). Machine learning is at the heart of AI, and within that deep learning, two subsets of AI where machines learn from data and make decisions with minimal human intervention (Janiesch et. al., 2021). It must be viewed as fundamentally new and different compared to past technologies in that it diminishes – or perhaps even replaces – the human ingenuity that so far has been at the root of every innovative and creative endeavour (Cuntz, Fink, & Stamm, 2021).

The AI market in India is projected to reach $8.3 billion by 2025, with an annual growth rate of 27.86% from 2025 to 2030, culminating in a market volume of $28.36 billion by 2030 (Statista, 2024). A study by the McKinsey Global Institute estimated that up to 800 million jobs could be lost to automation by 2030, representing around 20% of the global workforce (Manyika et al., 2017). As AI continues to expand and introduce novelties, it is expected to profoundly impact many other aspects of life, both positive and negative (Dela Cruz et al., 2022).

As a result, economic stability can be simultaneously developed and disrupted in multiple sectors possessing significant implications for national security and global balance of power. To gauge the benefits of this transformation and to empower sustainability goals for the betterment of humanity, we need collaboration among policymakers, scientists, researchers, scholars, civil society, technology experts, and investors worldwide (World Economic Forum, 2018).

Implications of Artificial Intelligence:

The rise of Artificial Intelligence (AI) is rapidly reshaping the global landscape, necessitating a comprehensive understanding of its multifaceted impacts. Its swift progress, coupled with continued R&D, creates substantial uncertainty about its socioeconomic implications (Lane & Saint-Martin, 2021). Three significant areas of uncertainty are- first, the application of AI technologies as either substitutes or complements for human labor ultimately leads to “winners and losers” in the job market (Autor et. al., 2022). Second, there are systematic differences between Advanced Economies (AEs) and Emerging Markets (EMs) in terms of exposure to AI. Third, exposure to its risks and benefits within countries differs across demographic groups and skill levels, making implications for economic disparities difficult to predict (Pizzinelli et al., 2023).

It also has the potential to have a drastic impact on the creative economy due to its increasing use in rapid content crea​​tion. It disrupts the already established market by reducing the industry’s employment rate (Naveen, 2024). Thus, there is an urgent need to restructure the Intellectual Property Rights in pace with the fast advancement of AI and the Fourth Industrial Revolution.

AI will play a substantial role in the national security of states as it influences warfare, the proliferation of zero cyber threats and malware, which will eventually challenge even the most sophisticated cyber protection (West & Allen, 2018). This necessitates significant improvements in existing defenses for India. AI is seen as an important tool for achieving military superiority, especially vis-à-vis India’s adversaries, where AI can act as a substantive means to strengthen and modernize the country’s defence system (Mohan, 2024).

This article ​​aims to examine the challenges to be foreseen by crucial stakeholders due to AI’s influence on the labour market and creative sectors while evaluating broader implications for Indian society and national security.

The Labour Market:

According to the International Monetary Fund’s 2023 paper titled ‘Labor Market Exposure to AI: Cross-country Differences and Distributional Implications’, India is an Emerging Market with a large share of agricultural employment. In terms of exposure to and complementarity with AI, 26% of Indian workers are in high-exposure occupations, with 14% in occupations with high complementarity and 12% in those with low complementarity. Additionally, women have lower exposure, 24% in comparison to 28% for men because of their substantial employment in agriculture. At the lower end of the distribution, exposure is exceptionally low and progressively increases with income (Pizzinelli et al., 2023).

Existing laws like the Information Technology Act, 2000, and the Personal Data Protection Bill, 2019, do not comprehensively address the unique challenges and complexities posed by AI technologies. In the absence of a specific policy regime, India will find it difficult to realize the full power of AI while potentially falling prey to the detrimental effects of AI proliferation on labour markets (Vempati, 2016). Thus, it is imperative to integrate AI into the employment landscape.

Policy Recommendations:

1. Universally Compliant Ethical Framework:  The OECD’s paper ‘Ethical Guidelines for Artificial Intelligence’ presents a good governance framework due to its comprehensive and pragmatic approach. It encourages AI actors to commit to transparency and responsible disclosure regarding AI systems. Providing meaningful information will help enhance a general understanding of AI systems and mitigate its risks (OECD, 2023). India must enact strict laws governing AI use in accordance with international standards (Google, n.d.).
2. Towards a Digital Economy:Internationally recognized voluntary consensus standards can serve as the basis for robust self- and co-regulatory regimes, as guideposts for regulators, and even as the regulatory standards themselves if incorporated by reference. India must move towards creating a digital economy. There are a variety of efforts underway to establish internationally recognized standards for AI, including within ISO and IEEE, as well as industry-driven initiatives such as MLPerf. Given the cross-border nature of this type of economy, AI regulatory frameworks and technical standards should ideally operate across nations and regions (Google, n.d.).
3. Generating High-Exposure, High-Complementarity Occupations: Occupations with already high education and long training requirements may have greater scope to integrate skills complementary to AI into their curricula. The Ministry of Human Resource Development and other ministries should lead the efforts to develop the skills of the country’s workforce. Initiatives like e NASSCOM’s ‘Future Skills’ should be efficiently utilized to teach students and government officials the skills they need for an AI-integrated occupational landscape (Manasa, 2023).
4. Updated Employee Contracts: Domestic labor replacement by foreign-located AI automation would imply not only job displacements but also losses in productivity and capital income for the domestic economy. The increasing use of AI in the workplace will also raise questions about collective bargaining rights and the right to organize the workers union (Manasa, 2023). To ensure complementary co-existence of human labor and AI, employee contracts must be updated and renegotiated to allow a safety net for those whose jobs would be temporarily displaced.
5. Collaborative Stakeholder Research: The joint efforts of diverse stakeholders to collectively study, develop and refine policies, ensuring they are aligned with global ethical standards and societal needs is essential to AI integration in the labour markets (Vinuesa et al. 2020). These research efforts are fundamental in setting up multilateral standards and regulations at the global level and will help prevent regulatory conflicts from isolated national strategies.

Intellectual Property Rights

In the 21st century, a nation’s progress is catalyzed through its knowledge economy, which is driven by the creative capabilities and leverage of its innovation. In this context,  Intellectual Property Rights (IPR) is a crucial element that drives economic growth by protecting innovation, attracting investment, fostering competition, and incentivizing Research and Development. Recent research underscores that India faces economic challenges due to its Intellectual Property Rights (IPR) framework not evolving in tandem with Artificial Intelligence (AI) advancements.

The National IPR Policy introduced in 2016 remains the foundational framework governing intellectual property rights in India. There is currently no specific provision in the Indian patent law (1970) or the Copyright Act (1957) or the Indian Trademark Act (1999) that specifically addresses AI-generated inventions and there is no specific law that addresses the protection of trade secrets related to AI in India (Chauhan & Singh, 2023). Though there have been significant advancements in technology, particularly in Artificial Intelligence (AI), there is no revised IPR policy that specifically addresses AI-related challenges. The absence of AI-specific IPR protections may result in revenue losses for creators and innovators, as AI-generated works could be inadequately protected under current laws. This legal gap creates uncertainty for AI-driven industries in India, discouraging investment and innovation.

The Key Policy areas with regard to IPR that India must focus to keep up with AI advancements are:

1. AI-Generated Content & IPR Protection: Indian and global book publishers filed a lawsuit against OpenAI, alleging unauthorized use of their copyrighted content for training AI models like ChatGPT. This legal action underscores the ambiguities in India’s IPR laws concerning AI, potentially deterring AI-driven investments and innovation due to fears of litigation (Reuters, 2025). The Copyright Act, 1957 could be amended to define ownership of AI-generated works (human-assisted vs. fully autonomous) and establish a licensing framework to compensate original creators when AI models are trained on their work.
2. Balancing Innovation with Regulation: A global study commissioned by the International Confederation of Societies of Authors and Composers (CISAC) highlights the potential economic impact of generative AI on the music sector. The study projects that, by 2028, AI-generated music could account for approximately 20% of revenues on traditional music streaming platforms and around 60% of music library revenues. This shift poses a substantial threat to the livelihoods of human creators, with an estimated cumulative loss of €10 billion in the music industry over a five-year period (Exploration, 2024).
   Thus, India should implement an AI-Creator Equity Framework, ensuring royalty payments, dataset transparency, AI-assisted copyright recognition, and innovation incentives to empower creators while fostering ethical AI-IPR collaboration in the creative industry.
3. Empowering Local Innovators for an AI-ready future: The NASSCOM report titled “AI Patents-Driving Emergence of India as an AI Innovation Hub” states that over 5,000 AI patents have been filed in India in the past decade, with 94% of them filed in the last five years, and 63% of granted patents belong to multinational corporations (MNCs). (Nasscom, 2025). This indicates a risk of monopolies while placing local innovators at a disadvantage. The Patent Act, 1970 could be updated to allow AI-assisted inventions while keeping human oversight and specific measures could be introduced to prevent big tech monopolies by regulating AI-driven patent hoarding.
4. Ethical AI & Fair Use Framework: Fair use standards should be defined for AI training on publicly available data and an AI Accountability & Ethics Board should be established to oversee AI-generated content risks. Developing sector-specific AI innovation policies with ethical safeguards is crucial in this regard.
5. Global AI-IPR Leadership & Policy Harmonization: India can push for a Global AI Fair Use Standard at WIPO, WTO, and UNESCO and position itself as a leader in ethical AI regulation balancing innovation and rights.

National Security

National security can be defined as the state’s ability to ensure citizen protection, internal stability, and geopolitical interests. Its most basic components include intelligence, surveillance, military readiness, and cybersecurity. Given the symbiotic relationship between technology and security (Singh et al., 2015), AI integration is essential for strengthening national security.

India’s foreign policy is centred around Vasudhaiva Kutumbakam or the world is one family. However, it is surrounded by nuclear powers like China and Pakistan which necessitates a pragmatic focus on strengthening its defense with AI-enabled systems like swarm drones, INS Surat, robotic mules, and CATS Warrior. Ranked among the top AI- skilled countries globally in the arena of defense ( Lele, 2023), India must accelerate efforts to realize its vision of becoming an AI superpower (Raja, 2023).

Policy recommendations:

1. Intelligence collection and analysis – Automating intelligence processing with AI can assist human analysts in handling vast data more efficiently (Hoadley et al., 2018). Enhancing AI integration in projects like the Central Monitoring System (CMS) and National Intelligence Grid (NATGRID) can strengthen national security, similar to how NETRA aids the Intelligence Bureau (IB) and Research and Analysis Wing (R&AW) to catch suspicious activities and illegitimate transmission of messages (Gupta & Muttoo, 2017).
2. Surveillance – India’s AI-enabled military equipment on its borders (IndiaAI, 2022) and police use of Facial Recognition Technology (FRT) are commendable but risk “dragnet surveillance” (Nakade, 2024). Clear laws are needed to protect the privacy of citizens and avoid indiscriminate data collection beyond suspects.
3. Central advisory committee – India’s defense AI development and application spans through the Ministry of Defence (MoD), Defence Public Sector Undertakings (DPSUs), DRDO, and armed forces (Mohan, 2024), leading to cross-cutting issues. A central advisory committee with diverse expertise can streamline efforts. India can implement tailored strategies from the structural framework of the U.S.A. ‘s Fundamentally Understanding the Usability and Realistic Evolution of Artificial Intelligence Act, 2017, which proposed a Federal Advisory Committee (Hoadley et al., 2018).
4. Strategic Collaboration – Limited industry-government collaboration hinders aligning of their AI R&D (Mohan, 2024). Strengthening public-private partnerships is crucial (The White House, 2017). The government should expand initiatives like iDEX and the Joint Working Group on AI for Tri-services (Press Information Bureau, 2022) for a more collaborative approach.
5. National security appropriation for AI – Defence budget has made a very small fraction of 3.94% for DRDO’s R&D, of the total defence budget allocation of Rs 681210 crore for 2025-26 (DELHI POLICY GROUP, n.d.). There needs to be increased reallocation towards R&D in view of prioritising AI-enabled national security.
6. Responsible AI – India’s stance at the REAIM (Responsible Use of Artificial Intelligence in the Military Domain) 2023 conference highlights its confusion around responsible AI (RAI) and ethics in defence. While RAI is emphasized in civilian AI (Satish et al., 2021), it should also be integrated into military ecosystems for consistency.
   AI in cybersecurity – With most cyberattacks on India linked to China and North Korea (Roy, 2023), India must adopt more AI-driven solutions like IndiaAI’s CyberGuard AI Hackathon (Jeevanandam, 2024) to safeguard its digital ecosystem from such threats.

Additional Insights:

India must improve cooperation with nations that are leading the way in the development and use of AI. China’s 2017 AI development plan, AI software developed by Baidu and most importantly the recent AI breakthrough by Chinese startup – Deepseek, which came up with an AI model in just 2 months at a much lower cost than ChatGPT or Gemini can serve as inspirations (Conroy & Mallapaty, 2025).

The Russian military lays heavy emphasis on autonomous vehicles and robotics for defence application (Migrate, 2024) and Israel is a leader in AI-driven cybersecurity, healthcare, and startups, providing opportunities for joint R&D and innovation funding for India. ‘India-Israel Vision on Defence Cooperation’ (2022) further strengthens the bilateral defence cooperation (Press Information Bureau, 2022). The US and India can collaborate on AI research, talent exchange, tech investments, and AI governance.

Conclusion:

The advance of AI has significant implications for the labour market, where it risks displacing those in occupations with low exposure and low complementarity with AI, the creative sector, where it can undermine human creativity and cause artist exploitation and in national security, where it can strengthen pragmatic defense strategies. In the creative sector, the absence of AI-specific intellectual property laws threatens innovation and fair compensation, requiring urgent legal reforms to safeguard creators’ rights.

To harness AI’s full potential, India must adopt a comprehensive, multi-stakeholder approach that integrates policy innovation, global AI collaborations, and strategic investments in research and development. Strengthening bilateral AI agreements and fostering a globally aligned regulatory framework will ensure that India remains competitive in the AI revolution. A balanced AI strategy—one that promotes innovation while addressing societal concerns—will be key to India’s long-term digital and economic transformation.

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