Dharma and the Regulation of Artificial Intelligence: Toward a Contextual Jurisprudence for Responsible Business Innovation

Abstract

The fast adoption of artificial intelligence systems in business decision processes has turned companies into unregistered governing bodies that use their algorithms to decide about work opportunities, financial services, product availability, and market involvement. The current AI ethics frameworks focus on technical standards and risk control and system visibility, but they fail to explain how businesses should handle their responsibilities, how to distribute legal accountability, and how to determine proper regulatory authority. The paper develops a Dharma-based regulatory governance system which serves as a duty-based legal framework to achieve ethical AI deployment through Indian Knowledge Systems. The research presents AI as a business tool that needs regulation instead of as a social-technical system to develop ethical AI governance based on four principles, which include Ahimsa, Satya, Lokasangraha, and Shraddha. These principles are translated into concrete corporate governance obligations and corresponding regulatory oversight functions, clarifying responsibility across the AI lifecycle. The paper shows, through its comparison of the EU AI Act with U.S. sectoral liability rules and discussions of the Algorithmic Accountability Act, that Dharma-based governance works alongside current laws to create a moral system that enables better law enforcement, minimises the spread of responsibility, and makes regulatory bodies more trusted. The analysis proves that duty-based AI governance systems decrease regulatory uncertainty, which benefits startup businesses and innovators, while they also reduce compliance risks and enable safe market expansion across different emerging markets. The paper links ethical duty with legal accountability and innovation sustainability to provide business law scholarship with AI governance as a moral-institutional system which supports the development of lawful and trustworthy and resilient entrepreneurial ecosystems.