CEA says AI-era tech shift brings new policy duties for regulators
New Delhi, Feb 26, 2026
CEA V Anantha Nageswaran said AI-enabled finance introduces new policy responsibilities, adding that regulators must strengthen oversight as India deepens integration with global capital markets
Financial stability in the coming decade may depend significantly on regulators’ ability to understand and supervise risks embedded in digital and AI-enabled finance, Chief Economic Advisor V Anantha Nageswaran said on Thursday.
Speaking at the Global Securities Market Conclave 2.0 organised by the International Financial Services Centres Authority at Gift IFSC, Nageswaran said that technology alone cannot build vibrant financial markets and regulators, market participants and innovators have to perform complementary roles. He said that technological transformation introduces new policy responsibilities.
“Policy makers can provide stability and predictability, but liquidity, innovation and market depth ultimately depend on investors, intermediaries and institutions,” Nageswaran said.
The CEA highlighted that India’s strategic patience in AI adoption was a strength, not a limitation, and the second-mover advantage permits careful observation of technological maturation, regulatory adaptation and business model consolidation before large-scale capital deployment. “It is not necessary to be the first mover in every technological wave to be a long-term beneficiary,” he said, while highlighting how ownership concentration, related-party transactions and valuation transparency within segments of the AI ecosystem have come under scrutiny.
He said that this would enable selective integration and participation in AI-enabled productivity gains while avoiding disproportionate exposure to valuation cycles.
Nageswaran stressed that India’s aspiration to become a developed economy by 2047 will require sustained mobilisation of both domestic and global capital. He said that the objective is not merely to attract financial flows but to channel them towards productive investments that strengthen infrastructure, foster innovation and generate employment.
“Embedding AI within this broad development framework may yield more durable gains than positioning the Indian economy as a speculative proxy for global AI exuberance,” the CEA said.
He said that India’s integration with global capital markets is deepening, not only in scale but also in composition and quality. Nageswaran mentioned that as cross-border finance expands through technology-enabled platforms, managing capital mobility responsibly becomes essential. “Greater efficiency in capital markets must be matched by resilience against volatility.”
He urged investors, asset managers and financial entrepreneurs to bring capital with patience and constructive information and to partner with regulators on sandboxes that build resilience rather than evade scrutiny.
The CEA cautioned that algorithmic trading and AI-driven investment strategies can transmit shocks rapidly across jurisdictions and amplify market movements. “Supervisory frameworks, therefore, must evolve to detect model-based herd behaviour, operational vulnerabilities and concentration groups in critical AI supply chains,” he added.
[The Business Standard]
