Speaking at the Global Fintech Fest 2026, Sitharaman said India was experiencing its demographic dividend in real time, with young Indians increasingly turning their potential into economic momentum.
She said India’s fintech capabilities were driving advances in digital public infrastructure and UPI, which processes billions of transactions, while the country was also emerging as the fastest-growing major economy and making expanding gains in space exploration.
Sitharaman criticised pessimistic assessments of India’s progress, saying some commentators continued to judge the country’s ability to convert its young population into economic growth using outdated benchmarks.
Young Indians, she said, were writing code, creating businesses and building platforms without waiting for conventional measures to validate their productivity. Entrepreneurs and innovators were turning India’s median age into a competitive advantage.
She linked this demographic strength to India’s ambition of becoming a developed nation by 2047, saying the achievements of its young population were already demonstrating the economic and technological potential of the demographic dividend.
Sitharaman on AI’s risks
Sitharaman also warned that the rapid development of artificial intelligence was creating new challenges for governments, regulators and society.She said agentic AI systems and large language models could potentially influence people without their awareness and could be used by small groups to attack a country’s systems or influence public opinion, including electoral outcomes.
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She cited a recent incident in which a country was targeted by several agentic groups working alongside a group of rogue operators, resulting in an attack on its wider systems.
The developments had prompted discussions with the Reserve Bank of India on whether a soft-touch regulatory approach could address emerging risks without restricting innovation.
Sitharaman welcomed the RBI’s September 10 recognition of the Unified FinTech Forum as another self-regulatory organisation for the fintech sector under the SROFT framework. About two years ago, the RBI had recognised the FinTech Association for Consumer Empowerment as a self-regulatory organisation.
She said the RBI had shown its ability to respond to emerging challenges in a timely manner, with the Securities and Exchange Board of India also working with the central bank on such issues.
She also referred to warnings from a researcher who had resigned from a leading AI laboratory about commercial frontier laboratories moving rapidly towards self-improving superintelligence while taking potentially serious risks. Sitharaman said concerns raised by the researcher had gained significance because senior figures within the frontier AI ecosystem had also acknowledged them.
Her concern, she said, was not intended to create alarm but to highlight the need for institutional accountability towards humanity at large.
Borderless menace: FM pushes for AI safety update
Sitharaman called for greater clarity from the global AI industry on whether safety safeguards were keeping pace with technological advances and asked what collective mechanisms existed to provide credible and transparent answers.
She said technology could help address vulnerabilities created by technology itself, but safeguards would need to evolve continuously and be deployed quickly.
She also highlighted the borderless nature of AI, fintech and digital platforms. A product could be developed in Bengaluru, operate on infrastructure in another country, use a model developed in the US, serve customers in Singapore, process data elsewhere and generate revenue in another jurisdiction.
Technology can cross borders instantly, while regulations remain largely national. Companies therefore face differing requirements covering data, licensing, cybersecurity, consumer protection, taxation and financial regulation.
For Indian technology companies expanding globally, navigating these differences would need to become part of their growth strategy. Sitharaman suggested considering a federated industry platform bringing together India’s broader technology ecosystem.
Such a platform could give the industry a collective international voice and engage foreign governments and regulators before regulatory positions hardened into barriers to market access.
New systemic risks
Sitharaman then turned to the risks emerging from tokenisation, agentic AI and quantum computing.
She said global experimentation with tokenisation ultimately raised a fundamental question about the nature of money used in such transactions. She urged the RBI to build further on its wholesale and retail CBDC pilots and strengthen its capabilities around the digital rupee.
Tokenisation can reduce intermediaries and make asset transfers almost instantaneous. Agentic AI can move from recommendations to direct action, compressing processes that once took days into seconds. Quantum computing could provide computing and security capabilities previously considered impossible.
But greater speed can also accelerate the spread of errors, fraud and market shocks.
AI can improve fraud detection while enabling attackers to automate larger and more sophisticated cyberattacks. Quantum computing also means existing encryption and security systems will need to be upgraded before current defences become obsolete.
Sitharaman cited the European Union’s Article 50 Transparency Rules, which took effect on August 2 this year. The rules require service providers to inform users when they are interacting with an AI system, unless this is already obvious. Synthetic text, images, audio and video must carry machine-readable markings identifying them as AI-generated. Deepfakes must be disclosed, with violations attracting a fine of 3% of annual global turnover.
She said autonomous cyber capabilities could be advancing faster than the mechanisms designed to control them, making company-specific safeguards insufficient where failures can have wider consequences.
The policy challenge, she said, was to build systems that are fast but accountable, autonomous but reversible, and innovative without weakening consumer trust.
AI may assist human judgment, but responsibility must remain with people and institutions. Regulators, boards and senior management need to understand where AI is deployed, what decisions it influences, what data it uses and what could happen if it fails. Higher-risk applications should face greater scrutiny before deployment and throughout their life cycle.
At the same time, avoiding AI also carries risks. Institutions dependent on older systems could lose competitiveness or become less capable. The choice, Sitharaman said, was therefore between responsible and poorly managed adoption.
Closer coordination among financial regulators, competition authorities, data protection bodies and cybersecurity agencies would also be required, with clearly defined responsibilities.
Sitharaman said the industry’s success should be measured not only through users, transaction volumes or valuations, but also through the trust it earns, the problems it solves and the resilience it creates.
India has demonstrated that it can deploy technology at population scale and turn ideas into solutions on the ground. As Indian talent and technology reach global markets, she said, that capability could extend to planetary scale.
But innovation must not erode the human ability to question, correct, restrain and take responsibility. India needs the ambition of its technology sector alongside institutions and standards that allow innovation to travel globally while protecting the people it serves.