• India plans to mandate royalty payments from AI companies for using copyrighted content in model training.
• The proposal challenges OpenAI, Google and others that rely on free access to public data.
• Industry groups, including Nasscom, have raised objections, calling the plan a barrier to innovation.

India has proposed a new rule that would require AI companies such as OpenAI and Google to pay content creators when their work is used to train AI models. The recommendation comes from a government panel formed in April, marking one of the strongest pushes globally to resolve long-running copyright concerns around AI training datasets.

Under the proposal, AI firms would still be allowed to use Indian content, but they would be required to contribute royalties to a central body representing copyright owners. Creators could then claim their share from this pool. The panel argued that this model is more effective than existing 'opt-out' systems, which place the burden on creators to track whether their work appears in massive AI datasets.

The move puts India at odds with countries like the United States, where major AI firms maintain that training on publicly available content qualifies as 'fair use' and should not require payment. At the same time, it aligns more closely with the European Union’s tighter rules and diverges from Japan’s broader exemptions for AI developers.

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The proposal comes as OpenAI faces a legal battle in India following accusations from news agencies, over improper use of copyrighted content. OpenAI has denied the claims and insists that its data practices comply with fair-use principles.

Stakeholders have 30 days to submit objections before the government reviews the plan. Industry body Nasscom, which represents companies including Google and Microsoft, has opposed the proposal, calling the royalty requirement a 'tax on innovation'. The Motion Picture Association, representing Netflix and Paramount, has also argued against changing copyright law, saying licensing frameworks are sufficient.