India’s AI Royalty Plan Challenges ‘Fair Use’ Claims By Tech Giants

An Indian government panel has recommended that AI companies pay content creators a share of revenue for using their work to train models — a move that could impact firms like OpenAI and Google, which advocate free access to publicly available data, reported Reuters.

The proposal comes as governments worldwide race to regulate AI and address copyright disputes, while AI firms argue their use of online content qualifies as fair use.

According to the panel’s report published Monday, AI companies should be allowed to access Indian content for training but must pay royalties into a centralised pool managed by a body representing copyright holders. The panel, formed in April, said this approach would ensure fair compensation.

India’s plan contrasts sharply with the United States, where AI companies claim training on public data falls under “fair use” and should not incur charges. OpenAI and Google Gemini — both with large user bases in India — did not respond to requests for comment.

The proposal is open for public and industry feedback for 30 days before government review. Meanwhile, OpenAI is already facing a lawsuit from news agency ANI over alleged use of copyrighted material, which the company denies, insisting its practices comply with fair use.

Globally, rules vary: Japan offers broad exemptions for AI training, while the European Union enforces stricter regulations allowing creators to opt out. The Indian panel dismissed the opt-out model as ineffective, arguing it unfairly burdens creators with tracking their work in vast AI datasets. Instead, creators whose content is used can claim payments from the centralized royalty fund.

Nasscom, a major tech industry body representing companies like Google and Microsoft, opposed the proposal, calling the mandatory fee a “tax or levy on innovation.” The Motion Picture Association, representing Netflix and Paramount, also urged no changes to copyright law, favoring licensing arrangements instead.