Advancing AI necessitates enacting legislation to govern its development and application. In the absence of appropriate regulations, there’s a risk of unintended adverse outcomes, such as perpetuating bias, violating privacy, and much more. Seeing the urgency and dire need for such legislation, the European Union (EU) has made significant progress in drafting a regulation that will ensure that AI’s expansion doesn’t go unchecked. This historic legislation, passed by an overwhelming margin of 523–46, created history as it went on to become the world’s first comprehensive framework for AI regulation.


The act has brought forward an approach that aims to divide different types of AI systems based on the risk that is associated with them. As per this approach, there will be four categories that will differentiate AI: unacceptable risk, high risk, general purpose, generative AI, and lastly, limited risk. An AI system that is deemed “unacceptable” based on the level of risk associated with it will be banned. If an AI is labeled as “high risk,” it would undergo several assessments before being considered appropriate for the market, while other AI systems would be required to follow transparency obligations.

The legislation imposes rigorous standards for these systems, including comprehensive risk evaluations, high-quality data sets, traceability measures, detailed documentation, human supervision, and resilience standards. Entities failing to comply with the new regulations could be subject to fines of up to 7 percent of their global revenue or $38 million, whichever amount is greater.

The legislation also comes with extraterritorial scope, which means that if an AI tool is used by an EU client that originates in the United States, if they fail to comply with the act or a user suffers, then the companies shall be held accountable. This underscores the significance for US-based AI companies to vigilantly track and adjust to the evolving regulatory framework in the EU main market concentration.


But as the European Union embarks upon making the first legislation on AI, India too has approached this situation and is taking steps to make a new set of laws that will make legislation to curb the menace of AI. The Minister of Electronics and Information Technology has said that soon there will be a new set of laws that will be very balanced and will aim to protect the rights of users of this technology.

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About the Author: Hemansh Tandon