An Indian government panel has proposed requiring AI companies to pay content creators a share of revenue for using their work to train models, a setback for companies such as OpenAI and Google that back free access to publicly available data.

The step comes as governments worldwide are fast developing regulations to resolve AI-related copyright disputes, as AI companies say they are making fair use of material generated by content owners.

AI firms should be able to access Indian content for training but should pay royalties to a central body representing copyright holders, the panel, set up in April, said in a report published on Monday.

India's plan marks a sharp divergence from jurisdictions like the United States, where AI giants say training models on publicly available data constitutes "fair use" for which they should not be charged.

AI firms such as OpenAI and Google Gemini, which count India among their top user markets, did not respond to requests for comment.

NO OPT-OUT

Industry and the public have 30 days to challenge the Indian plan, which faces review by government officials.

OpenAI is locked in a court battle triggered by accusations from Indian news agency ANI over use of copyrighted content. The company has repeatedly denied wrongdoing and said its use of online content amounted to fair use.

While Japan gives AI firms broad exemptions for use of such content, the European Union has stricter rules that allow content owners to opt out of such use.

The Indian panel called the opt-out model ineffective, saying it unfairly forced creators to track down their own work in massive AI datasets.

Instead, if their work is used by AI platforms, they can claim funds from the centralised royalty pool.

Nasscom, an influential tech industry body that counts Google and Microsoft among its members, has formally dissented, telling the panel in comments that the mandatory fee amounts to a "tax or levy on innovation".

The Motion Picture Association, which represents Netflix and Paramount, previously told the panel there should be no change in the copyright law, with efforts focused on licensing instead.