Regulatory Sandboxes: Balancing Innovation and Risk in AI

Regulatory sandboxes are crucial for fostering innovation while ensuring control. At the India AI Impact Summit 2026, IFSCA's CTO emphasized the need for these frameworks to allow safe innovation. Discussions highlighted India's potential need for distinct AI protocols. The focus remains on market integrity and consumer protection.

At the India AI Impact Summit 2026, regulatory sandboxes emerged as a pivotal topic, underscoring their importance in permitting startups and other industry players to innovate within a controlled setting. These frameworks provide the necessary guardrails to foster innovation without compromising security or integrity, as explained by IFSCA's Chief Technology Officer, Joseph Joshy.

During the summit, Joshy focused on the need for regulatory oversight from a technological perspective. He highlighted that, especially in the absence of specific regulations, sandboxes could guide innovation forward by offering a controlled environment. Joshy further elaborated on how IFSCA aims to maintain a balance between risk and innovation, ensuring market integrity and consumer protection.

The summit also addressed India's potential development of unique AI protocols factoring in cultural and scientific contexts, suggested by Adani Defence and Aerospace's Senior VP, Rangarajan V. The discourse extended to the digitization landscape, where Yotta Data Services highlighted the critical role of data infrastructure in AI development. These discussions revealed the intricate dynamics of innovation, regulation, and technology in the evolving AI sector.

(With inputs from agencies.)