Discuss how extraterritorial regulations like the EU AI Act shape technology governance in third countries such as India. Suggest a suitable regulatory response.

The EU AI Act (Regulation 2024/1689), whose core obligations became enforceable on 2 August 2026, applies to any provider whose AI outputs are used in the EU, irrespective of where the provider is located [1][2]. Such extraterritorial reach makes Indian AI governance partly a response to rules India did not write.

Channels of influence on third-country governance

• Market access: the Act's risk-based tiers — prohibited, high-risk (hiring, credit scoring, education, border control) and limited-risk — require Indian HR-tech and ed-tech exporters to complete conformity assessment, EU registration and quality-management systems before entry [1].
• Norm diffusion ("Brussels Effect"): the GDPR template visibly informed India's Digital Personal Data Protection Act, 2023 [6]; the AI Act is similarly pushing risk-tiering into Indian policy discourse.
• Compliance costs: enforcement by the EU AI Office with national authorities [2] favours large IT majors possessing governance-risk-compliance capacity over smaller startups.
• Design mismatch: EU law assumes AI is a finished product, whereas India's iterative, continuously-updated software model creates post-approval conformity gaps.

India's evolving response

• India AI Governance Guidelines (MeitY, under IndiaAI Mission) adopt a techno-legal, pro-innovation framework of seven sutras with proportionate safeguards for high-risk uses, rather than a standalone AI statute [3].
• An institutional layer through the AI Governance and Economic Group (AIGEG) as the inter-ministerial coordinating mechanism [4].
• Use of existing law: the IT (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2026 mandate labelling and traceable metadata for synthetically generated content [5].

A suitable regulatory response

• Retain the guidelines-plus-existing-law route, but codify a statutory risk classification so Indian documentation gains recognition abroad.
• Pursue standards interoperability — mutual recognition of audits via BIS and international standards bodies — to avoid duplicate certification.
• Convert burden into advantage by nurturing an "AI compliance-as-a-service" industry on India's IT-services base.
• Support MSMEs through regulatory sandboxes and shared testing infrastructure under the IndiaAI Mission.

Extraterritorial regimes thus govern third countries less by command than by market gravity, making compliance a condition of trade. A calibrated Indian path — light-touch domestic rules married to interoperable global standards — can protect innovation while securing market access, enabling India to move from rule-taker to norm-shaper at the India–AI Impact Summit 2026.