IFSCA Calls for Guardrails to Support AI Innovation Within Framework
New Delhi, February 16: Regulatory sandboxes are critical to ensuring innovation flourishes without compromising market integrity, a senior official of the International Financial Services Centres Authority said on Monday at the India AI Impact Summit 2026.Speaking during a session at the five day summit in the national capital, IFSCA Chief Technology Officer Joseph Joshy underscored the need for regulators to create structured environments where startups and industry players can test emerging technologies before formal regulations are introduced.
“We need to ensure that there are regulatory sandboxes among regulators, so that there are guardrails. Before regulations come, startups and others can build things in a controlled environment, so that you do not stifle innovation and that you encourage it within the framework,” Joshy said.
Joshy, who also serves as Chief General Manager and Head of FinTech and IT at IFSCA, emphasized that sandboxes become particularly relevant when innovation emerges in areas where regulations are yet to be defined. In such cases, a controlled testing environment can help chart the regulatory path forward.
AI Regulation Must Address Systemic Risk and Consumer Protection
Addressing concerns around artificial intelligence models, Joshy noted that certain AI systems may pose systemic risks. As a regulator, IFSCA will primarily focus on market integrity and consumer protection.He stated that regulations are activity based rather than entity based. This means that whether it is a startup or a large conglomerate, any powerful AI model with significant risk implications must operate within a defined framework.
“We are not stopping anybody from innovating, but ensuring to have a balance between risk and innovation,” he said, adding that some emerging AI models could have a wide risk impact and therefore require oversight.
Call for India Context Protocols in AI Development
During the session titled India’s Path to Sovereign, Frontier AI, Shaped by the Needs of the Global South, Rangarajan V, Senior Vice President and Chief Digital Officer at Adani Defence and Aerospace, said India may need to develop its own India Context Protocols to generate solutions tailored to the country’s unique needs.He suggested that aspects of Indian culture and science should be factored into AI systems to create India specific answers in the global AI landscape.
Compute Infrastructure Seen as Essential Commodity
Sunil Gupta, Co Founder, Managing Director and CEO of Yotta Data Services, highlighted the importance of digital infrastructure in enabling AI growth.He said digital highways in the form of data centres, networks, and compute capacities must be treated as essential commodities. “Compute infrastructure for AI is the most essential commodity,” Gupta noted, stressing the foundational role of computing power in scaling AI technologies.
Summit Brings Global Leaders and Industry Together
The India AI Impact Summit 2026, which began on Monday, will host heads of state and government, overseas representatives, and industry leaders over its five day duration. Discussions at the summit are focused on shaping sovereign AI strategies, fostering innovation, and ensuring that emerging technologies are aligned with the needs of the Global South.The deliberations reflect a growing emphasis on balancing technological advancement with regulatory preparedness, as India charts its course in the evolving AI landscape.
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