FM calls for AI safeguards to keep pace with rapid technology evolution | Economy & Policy News

Finance Minister Nirmala Sitharaman on Friday called for stronger safeguards around artificial intelligence, saying they must be put in place quickly and continuously updated to keep pace with the rapid evolution of the technology. Without such safeguards, “the question of AI going rogue is left for society at large to answer,” Sitharaman said, calling this “an unsustainable distribution of risk”.

 

Her comments come amid growing concerns within the AI industry over the pace at which frontier AI models are being developed and deployed. A researcher recently resigned from one of the world’s leading AI laboratories, publicly warning that commercial frontier labs were “racing straight to self-improving super-intelligence and gambling with our lives”.

  

“So is there a case to examine that warning closely? Or do we simply assume the risk is overstatement? I raise this not to cause alarm, but to emphasize institutional accountability towards larger humanity,” Sitharaman said in her address at the Global Fintech Fest 2026.

 

“Who from the global AI industry will stand up and reassure the public? Who will demonstrate that safeguards are actually keeping pace with the speed? Where is the structured collective effort to provide credible and transparent answers?” she asked.

 

Sitharaman said technology could also be used to address vulnerabilities created by technology itself, but safeguards needed to evolve as quickly as the risks. AI was a “double-edged sword”, she said, with the potential to improve fraud detection while also allowing attackers to automate “larger, more sophisticated cyber attacks”.

 

The objective should therefore be to balance innovation with safety rather than choose one over the other. “Our goal should be neither to block innovation out of fear, nor to let speed compromise safety,” she said, calling for “built-in checks, human oversight, and circuit breakers that protect the system”. “We all collectively need to ensure that innovation expands efficiency without bringing new forms of systemic fragility,” she said, adding that while AI could assist judgment, responsibility must remain with humans and institutions.

 

Sitharaman also warned regulators, boards and senior management against leaving AI governance entirely to technology teams. They need to understand where AI is being deployed, what decisions it influences, what data it relies on and what could go wrong if the system fails, she said. Higher-risk applications should face greater scrutiny before deployment and throughout their lifecycle, she said. At the same time, failing to adopt AI could carry its own risks, Sitharaman said. Institutions that continue to rely entirely on legacy systems could become less capable, lose competitiveness or eventually fade out.

 

“The relevant choice is therefore not between adopting AI and avoiding AI. The real choice is between responsible adoption and well-managed adoption,” she said. Institutions need to assess where AI creates value, where it poses material risks and what safeguards are required for each use case, she said. Financial regulators, competition authorities, data protection authorities and cybersecurity agencies would also need clarity on their respective responsibilities and reliable mechanisms to coordinate, she added.

 

Sitharaman said she had discussed with the Reserve Bank of India (RBI) whether a regulatory approach could address emerging AI risks without stifling innovation. She also urged the central bank to further advance its wholesale and retail central bank digital currency pilots and sharpen its capabilities around the digital rupee.

 

Sitharaman also flagged the growing gap between the borderless nature of technology and the national boundaries of regulation. “AI, FinTech, and digital platforms are, by their very nature, models,” she said, pointing to products that can be designed in one country, use infrastructure and models in another, serve customers elsewhere and generate revenue across multiple jurisdictions.

 

“The talent that builds these products may be concentrated in a handful of countries. The market for them is in the whole world, but rules remain national,” she said.

 

For Indian technology companies looking to expand overseas, navigating cross-border regulation was therefore “no longer a peripheral matter” but had to become part of their global growth strategy, she said.

 

Sitharaman said there could be merit in creating a federated platform bringing together India’s technology ecosystem to give the sector “a credible collective voice internationally”.

 

Such a platform could engage with foreign governments and regulators, work towards interoperable standards, share best practices and help Indian companies enter new markets, she said.

 

Technology companies, however, must also meet their tax obligations in jurisdictions where they earn profits and “give something back to the society that has made their success possible”, she said.