Policy Newsletter | February 2026

Convergence of technology governance with industrial strategy

The outcomes of the recently concluded global AI summit clarified India's approach to responsible AI deployment while the Union Budget reinforced fiscal support for manufacturing, climate technologies and digital infrastructure.

AI Summit 2026

The global AI summit hosted by India marked a transition from broad principles to operational governance where participants endorsed a framework designed to balance innovation with accountability, security and sovereign oversight. Here is our analysis of some key outcome statements from a policy perspective:

“AI systems should be classified according to risk, with heightened obligations for systems deployed in critical sectors affecting rights, safety, and public welfare”

Implications

• High risk AI systems subject to audit, documentation and human oversight.
• Sector-specific compliance expected in healthcare, finance and public infrastructure.
• Companies must establish risk classification frameworks and maintain technical documentation for regulatory review.

“Developers and deployers of AI systems must ensure explainability, fairness and mechanisms for human intervention where automated decisions materially affect individuals or communities.&rdquo

• Bias mitigation and fairness testing required.
• Human oversight mandated in high-impact use cases.
• Documentation of model behavior expected.
• Governance structures and internal audit processes will become essential for AI deployment in regulated sectors.

“Cross-border data flows should be enabled through trusted mechanisms that ensure privacy, security and sovereign regulatory oversight”

Implications

• Consent-based data use emphasized.
• Secure cross-border transfer frameworks expected.
• Federated data models for sensitive sectors.
• Cross-border AI collaborations will require contractual safeguards, data minimization strategies and localization compliance were applicable.

“Government should procure AI systems that meet standards of auditability, security, lifecycle risk assessment and transparency”

Implications

• Trusted vendor requirements.
• Mandatory audit trials and lifecycle risk assessments.
• Procurement standards likely to shape private sector norms.
• Public sector AI standards will become benchmarks for broader compliance expectations.

“AI governance should foster innovation while mitigating systemic risks, ensuring that regulatory approaches remain proportionate and adaptive”

Implications

• Regulatory sandboxes expected.
• Flexible compliance pathways for startups.
• Sector specific guidance to evolve over time.
• Early engagement with regulators and sandbox participation offers strategic advantages.

Takeaways for Global businesses

• Embed AI governance into product design.
• Prepare for algorithmic audits and risk classification.
• Strengthen data governance and cross-border transfer safeguards.
• Monitor procurement standards as regulatory benchmarks.

Union Budget 2026

India's Union Budget reinforces calibrated openness to foreign investment, with incentives tied to manufacturing scale, sustainability and digital infrastructure.

Key Policy Outcomes

• Expanded support for electronics, semiconductors, EV supply chains and green technologies.
• Production-linked incentives remain central.
• Increased funding for renewable energy equipment and low carbon manufacturing.
• Sustainability metrics tied to incentives.
• Expanded funding for digital infrastructure and AI deployment.
• Growth in public digital platforms.
• Procurement linked to transparency and origin disclosures.
• Increased focus on resilience in strategic sectors.

Takeaways for Global businesses

• Foreign manufacturers must integrate local value addition and technology transfer to access benefits.
• Climate tech and energy transition solutions face a favorable policy environment.
• Opportunities for global tech firms are expanding, but procurement will prioritize trusted vendors and security compliance.
• Market access increasingly depends on supply chain traceability and compliance.

Practice Area Implications

Corporate / M&A / Foreign Investment

• Localization requirements will share deal structures.
• Increased security screening in sensitive sectors.
• Joint Ventures might become popular in certain corridors.

Technology, Media and Telecommunications (TMT)

• AI Governance affecting digital infrastructure deployment.
• Trusted vendor requirements in telecom and cloud services.
• Compliance-by-design becoming essential.

Privacy & Cybersecurity

• Cross-border data safeguards becoming mandatory.
• Cybersecurity compliance tied to procurement eligibility.
• Auditability requirements increasing.

Intellectual Property

• Joint innovation increasing need for robust IP frameworks.
• Training data ownership and model provenance scrutiny.
• Technology transfer obligations linked to incentives.

Competition and Antitrust

• Industrial policy favoring domestic value addition.
• Procurement preferences may trigger competition scrutiny.
• Consortium bids require antitrust risk assessment.

Dispute Resolution

• Rise in disputes over AI liability and procurement eligibility.
• Increased arbitration in cross-border technology collaborations.
• Regulatory investigations triggering parallel proceedings.

Looking Ahead

Across the AI Summit and Union Budget, four major trends emerge:

• Trusted Technology Ecosystems.
• Industrial Policy aligned with digital sovereignty.
• Procurement will emerge as a regulatory lever.
• India will align with global frameworks while preserving strategic autonomy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.