On one hand, there is an increasing requirement to create an AI that becomes the beacon for the country, to rival OpenAI, Anthropic, DeepSeek, and others. On the other, there is an increasing amount of lack of trust in Indian Startup market to build an AI that can very well rival others. To add to this, there is the requirement for Indian lawmakers to create consumer friendly privacy & copyright regulations that respect the boundaries of a person and their contribution & the knee-jerk reaction to overregulate an issue that can raise the levels of unemployment.

Amidst this, the report from Oxford Economics for Digital Prosperity Asia brings both a distress signal and a much-needed clarity. The report based on 550 Ecosystem participants, comprising 350 startups and venture capital firms and 100 incubators indicated that 44% i.e. roughly 242 members identified data governance and digital trust regulations as a primary regulatory hurdle over AI regulation, cybersecurity and platform rules - that requires the limited time & investment they have over other facets like development of the product.

Data Governance rules require entities to ensure quality & security for user and business data that is collected by them / transmitted to them. The Information Technology Act, 2000 (IT) & the Digital Personal Data Protection Act, 2023, (DPDPA), dictates the rules that have to be followed. Whilst this report clearly solidifies the reasons behind enacting DPDPA i.e. protection of data in digital world – it also brings / raises the flag for concern as nearly 50% of startups – those that are poised to become global giants and eventually create a Sovereign AI – are facing significant constraints because of the regulations.

When it comes to Startups & Sovereign AI – the events that are about to happen will say whether the regulations governing data governance are a bigger hurdle for startups so that they eventually abandon any hopes of creating an icon.