Regulatory sandbox: Karnataka govt to amend law keeping AI in mind

Karnataka wants to amend the existing law to operationalise a regulatory sandbox that will allow controlled testing of disruptive technologies, including Artificial Intelligence (AI), IT/BT Minister Priyank Kharge said. 

The minister chaired a meeting recently to discuss “some crucial amendments” to the Karnataka Innovation Authority (KIA) Act. 

Enacted under the previous BJP government in 2020, the KIA was positioned as India’s first pan-sector initiative for private companies to test ideas unregulated under law. Five years on, the regulatory sandbox under the KIA has not taken off.

Earlier, this month, Priyank reviewed the regulatory sandbox framework, its operational workflow, implementation mechanism, legal aspects and global benchmarks.

“We discussed some crucial amendments to the existing KIA Act that will help operationalise and implement the regulatory sandbox framework. This will allow innovative technologies to be tested in a controlled environment, with reasonable relaxation of state regulations where required, so that genuine innovation is not held back by regulatory barriers,” Priyank said. 

The minister said he is trying to move the amendments in the next budget session of the legislature in March. 

“The final framework (of the sandbox) will be opened up soon for consultation with startups, industry, state departments and think tanks before it is formally introduced,” Priyank said. “Our intent is to make the framework decisively pro-technology while remaining accountable and safe.”

The sandbox should have been operationalised last year. “It got delayed because we were waiting for the union government’s guidelines on AI. The guidelines came only recently. We don’t want to do something that contradicts those guidelines,” Priyank told DH. 

Karnataka has had its share of regulatory tussle with disruptive technology. In the transport sector, for instance, carpooling, shuttle services and bike taxis are restricted under the motor vehicles rules.

“We have banned Rapido (bike taxis). But what if it was in a regulatory sandbox?” Priyank said. “There’s no point in starting businesses and for us (government) to tell them that they can’t run. Some have become unicorns.”

He indicated that amendments to KIA will factor in AI. “Technology has changed. There was no AI back when the law was made,” he said.

The minister also flagged concerns with AI. “The more we dive deep, the more we’re getting to know,” he said. “For example, Grok was found to have racial bias.”