As AI reshapes ad agencies, India's missing guardrails put governance in industry's hands

Artificial intelligence has moved from experimentation to execution inside India's advertising and creative agencies, with client conversations now centered less on whether AI should be used and more on how it is being deployed, governed and disclosed. Yet the rapid adoption is unfolding in a regulatory environment where India still lacks a dedicated legal framework governing AI use in the creative and media ecosystem.

As agencies integrate generative AI across ideation, content production, media planning and campaign execution, they are increasingly relying on internal governance policies, legal reviews and global compliance frameworks to bridge the regulatory gap.

"Almost every brand conversation now includes a question about how we're using generative AI on their business specifically, not AI in general," said Preetham Venkky, Chief Digital Officer, Omnicom Advertising India.

"We don't hand them a generic policy document but build the answer around what they're actually asking. And more often than not, what they want lines up with what we're already doing," Venkky added.

The shift reflects how AI has become embedded in agency workflows. What was once a technology pilot is now a core capability, forcing agencies to develop governance structures even before comprehensive regulation arrives.

Omnicom, for instance, introduced an internal AI policy in 2022—well before generative AI became mainstream—and has updated it every quarter as the technology evolved.

"We've had an AI policy at Omnicom since 2022. It's been constantly updated every quarter because the technology has changed every quarter. But the core has stayed the same: be progressive, move fast, but always ensure brand safety. We don't trade one for the other," Venkky said.

Unlike markets such as the European Union, which has introduced the AI Act, India currently has no standalone AI legislation.

The only notable regulatory development so far has been amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, which require labelling of synthetically generated information in certain circumstances. However, the responsibility to verify disclosures and display labels largely rests with digital platforms rather than advertisers or agencies themselves.

Separately, the Advertising Standards Council of India (ASCI) earlier this year released draft guidelines titled Draft Guidelines for Responsible Labelling of Synthetically Generated Content in Advertising. 

The proposed framework recommends a risk-based approach to AI disclosures depending on the likelihood of consumers being misled. While still awaiting finalisation, legal experts say the guidelines are expected to become an important reference point for agencies.

In the absence of binding legislation, companies are increasingly adopting self-regulation.

"A year ago, the question was, 'Can we use AI?' Today it's, 'How exactly are you using AI?'" said Abhishek Raut, Senior Creative Director, Gozoop Creative. "Brands want to understand the process, the risks, and where the human involvement sits. Transparency is becoming as important as the technology itself."

According to Raut, most ethical principles governing AI remain universal.

"Don't misuse data, don't infringe on copyright, don't mislead people. Those rules don't really change with geography. The way AI is used may vary by market, but responsible use remains the same everywhere," he said.

Industry executives say multinational networks have largely relied on global AI governance policies rather than creating India-specific frameworks.

"A separate India rulebook isn't needed since the global policy has enough flex built in for local markets to work the way they need to," Venkky said. "A team here can bring in an AI partner or tool that makes sense for the Indian market, as long as that tool clears our security and IT standards first. Omnicom has been genuinely open about this. They want local nuance. They just want it inside the established guardrails."

Legal experts, however, caution that internal policies alone are insufficient unless backed by robust operational controls.

Ravi Gupta, Partner at Scriboard, said agencies should first regulate which AI tools employees are permitted to use.

"The first measure should be to control the use of AI tools within the organisation," Gupta said. Agencies should maintain approved lists of AI platforms, prohibit the use of unauthorised tools for official work, and prevent employees from uploading confidential campaign information, client data or other sensitive material without explicit approval.

He added that agencies should also ensure they have secured the necessary licences and commercial usage rights for AI platforms before deploying them in client work. Gupta said human oversight remains equally critical.

"AI-generated content should be manually reviewed by the creative and legal teams before it is shared with the client or published publicly," he said. Such reviews should assess whether content is misleading, infringes third-party intellectual property, or violates personality rights.

Client contracts also deserve closer scrutiny, Gupta added, as some brands may prohibit AI usage altogether or require prior approval before AI-generated content is used in campaigns.

Another key recommendation is maintaining detailed records of AI usage, including the tools deployed and, where feasible, the employees using them, enabling agencies to investigate disputes or compliance issues later.

Legal practitioners say governance will become increasingly important as AI-generated advertising becomes more sophisticated.

"From a legal perspective, advertising agencies integrating AI into campaigns must ensure that the use of AI does not result in misleading advertisements, infringement of copyright, trademarks or personality rights, misuse of personal data or unfair commercial practices," said Sonam Chandwani, Managing Partner, KS Legal & Associates.

She said AI-generated content should be independently verified for factual claims, particularly in regulated sectors such as healthcare, financial services and food products, where inaccurate representations could attract statutory liability.

Chandwani also urged agencies to clearly define contractual responsibilities with both clients and AI vendors, covering ownership of AI-generated creative assets, liability, indemnities and data handling obligations.

"As AI regulation continues to evolve in India, agencies that combine technological innovation with documented governance, legal oversight and transparent accountability will be better positioned to mitigate regulatory exposure and preserve consumer trust," she said.

Technology companies building AI-powered marketing platforms are also beginning to formalise governance alongside product development.

Russhabh R. Thakkar, Founder and CEO of Frodoh, said responsible AI practices are becoming foundational rather than optional.

"As AI continues to become a core part of our platform, we are strengthening our governance framework alongside our product capabilities. Our current approach is built around responsible AI principles, with a strong focus on privacy, security, transparency and human oversight. We believe governance should evolve with technology, and formalising these practices is a natural part of our roadmap," he said.

Lawyers also recommend agencies proactively disclose when AI has been used to create or substantially modify advertising content, even where such disclosures are not legally mandated.

Beyond transparency, agencies are advised to ensure they possess the necessary permissions to use AI tools and remain vigilant against infringing third-party intellectual property or personality rights, particularly given how easily generative AI can replicate styles, likenesses and creative assets.

For now, India's creative industry finds itself in an unusual position: AI adoption is accelerating far faster than regulation. Until dedicated legislation emerges, agencies are effectively building their own governance frameworks—balancing innovation with legal risk, client trust and brand safety.

The result is an industry increasingly governed not by statutory AI law, but by internal policies, evolving industry standards and the understanding that responsible AI may become a competitive differentiator long before it becomes a legal obligation.