AI and Consumer Rights in India Working Paper

2026-08-13

AI Summary

This study addresses the structural challenges posed by artificial intelligence–induced consumer harm under India’s Consumer Protection Act (2019), particularly difficulties in establishing causation, ambiguity in identifying responsible parties, and unclear allocation of liability across multiple actors. Through a systematic evaluation combining statutory analysis, mapping of AI value chain responsibilities, hypothetical case simulations, and policy assessment, the paper reveals a significant institutional mismatch between traditional product liability frameworks and the unique characteristics of AI technologies. While the existing law demonstrates potential for technology-neutral inclusivity, critical gaps persist in causal proof standards, role delineation, and enforcement coordination. The findings underscore an urgent need for judicial interpretation or supplementary regulations to establish a proportionate, multi-stakeholder accountability mechanism tailored to AI-driven consumer harms.

Abstract

As AI systems proliferate in consumer facing applications, questions about liability for AI related harms remain unresolved. This working paper examines whether India's Consumer Protection Act, 2019, adequately addresses harm caused by defective AI products and services, and whether it proportionately allocates liability across the AI value chain. The Act's broad definitions of product liability, harm, and deficiency appear technology agnostic and potentially applicable to AI related incidents including personal injury, psychological harm, biased outputs, and loss of control. However, significant gaps remain. Proving causation between AI defects and consumer harm presents a technical challenge, as AI failures often stem from design choices rather than discrete defects. Additionally, the Act's framework assumes distinct roles for manufacturers, sellers, and service providers, yet the AI value chain involves overlapping responsibilities among data providers, model developers, deployers, and users that do not neatly map to these categories. Current liability frameworks lack proportionate mechanisms to effectively address complex, multistakeholder AI harms. While the Act may cover AI entities, enforcement requires clarification on sector specific overlaps.

Problem

• AI liability
• consumer protection
• product liability
• AI value chain
• causation

Innovation

• AI liability
• consumer protection
• value chain responsibility
• causation challenge
• regulatory gap