Finance Minister Nirmala Sitharaman called on Friday for the implementation of stricter mechanisms for artificial intelligence protection, human oversight, and regulatory coordination. She warned about systemic risks that could arise from the rapid development of technologies.
Sitharaman emphasized that without appropriate protective measures, society would be forced to independently address the potential loss of control over AI, describing such a distribution of risks as 'unsustainable.' Her remarks came amid growing concern in the AI industry regarding the speed of developing and deploying advanced AI models.
Recently, one researcher left a leading global AI laboratory, publicly stating that commercial advanced labs 'are striving directly towards self-improving superintelligence and are playing with our lives.' Sitharaman questioned whether this warning should be taken seriously or dismissed as an exaggeration, adding that her goal was not to cause panic but to highlight institutional responsibility to humanity as a whole.
During her speech at the Global Fintech Festival 2026, she asked who in the global AI industry would take on the task of reassuring the public and demonstrating that protective measures are keeping pace with the rate of development. She also noted that technology can be used to eliminate vulnerabilities created by the technologies themselves, but protective mechanisms must evolve as rapidly as the risks.
Sitharaman characterized AI as a 'double-edged sword,' possessing the potential to improve fraud detection while simultaneously allowing malicious actors to automate 'larger and more sophisticated cyberattacks.' She insisted that the goal should be balancing innovation and security, not choosing one at the expense of the other. She called for 'built-in checks, human oversight, and safeguards protecting the system,' stressing that responsibility must always remain with people and institutions, even if AI assists in decision-making.
The Finance Minister also cautioned regulators, boards of directors, and top management against delegating AI management solely to technical teams. These groups must understand where AI is being applied, what decisions it influences, what data it relies on, and what might happen in case of system failure. More risky applications should undergo more rigorous scrutiny before and throughout their entire lifecycle. Furthermore, Sitharaman reminded that refusing to adopt AI also carries risks, as institutions relying solely on outdated systems may lose competitiveness or disappear.
She concluded that the choice is not between adopting AI and avoiding it, but between responsible and well-managed adoption. Institutions need to assess where AI creates value, where it poses significant risks, and what protective measures are required for each use case. Additionally, financial regulators, antitrust bodies, data protection authorities, and cybersecurity agencies must gain clarity on their responsibilities and reliable coordination mechanisms.
Sitharaman reported discussing with the Reserve Bank of India (RBI) the possibility of applying a regulatory approach to address emerging AI risks without stifling innovation. She also strongly recommended that the central bank promote pilot projects for wholesale and retail central bank digital currency and enhance its capabilities regarding the digital rupee.
The Minister also pointed to the growing gap between the cross-border nature of technologies and national boundaries of regulation. She noted that AI, Fintech, and digital platforms are inherently models that can be developed in one country, use infrastructure and models in another, serve customers in a third, and generate revenue in multiple jurisdictions. Although the talent creating these products may be concentrated in several countries, the market for them is global, while the rules remain national.
Sitharaman stressed that for Indian tech companies aiming to enter foreign markets, navigating cross-border regulation has ceased to be a secondary issue and must become part of their global growth strategy. She suggested that it would be advisable to create a federal platform uniting India's technological ecosystem to give the sector an 'authoritative collective voice on the international stage.' Such a platform could interact with foreign governments and regulators, work on compatible standards, exchange best practices, and help Indian companies enter new markets. Nevertheless, tech companies must also fulfill their tax obligations in the jurisdictions where they earn profits and 'give back to the society that made their success possible.'