How AI Hardware Advances Reshape Digital Policy Frameworks
- Chirag Kumar
- 8 minutes ago
- 4 min read
AI chips are becoming faster at a remarkable speed. Semiconductor performance improves continuously while regulatory frameworks are static. With the ability to make autonomous, real-time decisions, Nvidia's latest processors are transforming everything from factory floors to the battlefield. Therefore, now India’s semiconductor mission and digital economy goals have become urgent. Recent advancements in AI hardware, particularly autonomous systems that possess the ability to make independent choices, are altering the computing systems, the structure of state power, and military capabilities. Nvidia's autonomous chip architecture, initially commercialized for industrial automation, has attracted the attention of defence establishments worldwide. India's digital policy framework does not address autonomous military systems. Liability for algorithmic decisions remains undefined. Data sovereignty concerns intensify when critical defence infrastructure depends on foreign-designed semiconductors. Without domestic semiconductor production, India cannot ensure the integrity of chips embedded in sensitive systems. The government's semiconductor mission can close the gap before geopolitical uncertainty.
The Hardware Revolution and Global Competition
Current AI is especially computation-hungry because it requires some advance computational hardware to work with big data sets and do a lot of math. The AI accelerator chips make autonomous decisions and process trillions of operations in a second. It is in fields such as health, transportation, defence, finance that the ability has a profound effect. The semiconductor supply chain now carries geopolitical weight. The United States enacted the CHIPS Act. China accelerated its national semiconductor program. The European Union established production targets. These patterns showing dependence on foreign production, are no longer acceptable.
The present geographic distribution of advanced chip manufacturing has caused governments to re-evaluate their technological dependencies. Export of top of the range semiconductors has become a tool in foreign policy (Weymouth, 2025) which in turn has seen large scale public investment in developing domestic foundries. These trends put forth the issue of the role of hardware capabilities in global governance. These dynamics bring to the fore the relationship between hardware capabilities and broader governance issues.
India's Strategic Response: The Semiconductor Mission
The Indian Army's designation of 2026-27 as the "Years of Networking and Data-Centricity" shows how military needs shape technology policy. Army Chief General Upendra Dwivedi's vision of a "data-driven, network-enabled, and fully integrated Army" operating across DIME-T domains requires computing infrastructure beyond current semiconductor capabilities.
India introduced the India Semiconductor Mission (ISM) which put in a budget of ₹76,000 crore for the development of semiconductor and display manufacturing domestically. Under the program, the government offers as much as 50% of the cost for projects which are setting up Semiconductor manufacturing units, compound semiconductor facilities, and ATMP plants. By the end of 2025 we saw that 10 projects had received the go-ahead in six states which is an investment of over ₹1.6 lakh crore. Also, these initiatives are a part of the larger Production Linked Incentive (PLI) scheme which has seen committed investments of around ₹1.61 lakh crore in key sectors.
Manufacturing chips is one challenge. Designing them is another. The Design Linked Incentive scheme targets design capabilities. India constitutes approximately 20% of the global workforce in semiconductor design. Policymakers recognize that manufacturing chips matters, but so does designing them.
Data Protection and AI Governance Frameworks
The increasing popularity of artificial intelligence (AI) related technology implies that there needs to be a more refined set of rules surrounding the processing of data and the making of decisions with the aid of algorithms. In India, data controllers must comply with the Digital Personal Data Protection Act, 2023 (DPDPA) which came into effect after rules which were set out in November 2025. These rules laid out specific guidelines with respect to consent from customers, the protection of data, and the notification of security-related incidents. The DPDPA attempts to categorize and define the roles of the large entities in the processing of data based upon the scope and the risk profile of the data being processed. There are additional conditions on such entities, including the completion of a risk assessment and the completion of an independent audit.
The European Union's AI Act, which entered into force in August 2024, represents the first comprehensive horizontal legal framework for AI regulation globally. It adopts a risk-based approach, categorizing AI applications by estimated level of harm and assigning respective responsibilities. Social scoring and some types of biometric monitoring are outright bans, while high-risk AI systems are subject to strict regulations concerning data, transparency, and human oversight. This regulatory architecture reflects a broader trend whereby hardware capabilities drive the need for governance mechanisms addressing algorithmic accountability.
Conclusion
We see AI hardware growth and digital policy as a base which is redefining how countries think of tech governance. As semiconductors play a role in strategic competition, policy frameworks must at the same time attend to issues of manufacturing base, supply chain resilience, data protection, and algorithmic accountability. India’s case which puts forth the Semiconductor Mission as an industrial policy with the DPDPA as a regulatory framework is a model of that integrated governance. What is put to test now is the ability of policy makers to put in place flexible frameworks which promote innovation at the same time protect fundamental rights and national interests in an age of very fast tech change.
References
1. Ministry of Electronics and Information Technology, Government of India – India Semiconductor Mission (https://ism.gov.in)
2. Press Information Bureau, Government of India – Semicon India Programme, 2024
3. Digital Personal Data Protection Act, 2023 and DPDP Rules, 2025 – Ministry of Electronics and Information Technology
4. European Union Artificial Intelligence Act (Regulation (EU) 2024/1689), Official Journal of the European Union, 12 July 2024
5. Observer Research Foundation – Evaluating India's PLI Scheme for Semiconductors, December 2024
6. PRS Legislative Research – The Digital Personal Data Protection Bill, 2023
ABOUT WRITER
Pramod Kumar Pandit is a First year student of Law ..
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