The Indian government has moved to regulate artificial intelligence (AI) diagnostic software as medical devices. The Central Drugs Standard Control Organisation (CDSCO) has issued a related directive. Developers of AI software must obtain a manufacturing or import licence from the licensing authority before clinical deployment.

The aim is to align software tools with established safety guidelines for medical equipment. Under the new framework, AI tools used to detect or diagnose certain conditions are now classified as Class C medical devices. This includes technologies used to image diseases like cancer and heart disease, such as X-rays, CT scans and MRIs. This category denotes moderate-to-high risk to patient health.

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New Regulatory Requirements for AI in Healthcare

The reclassification brings AI health software into the same regulatory policing as traditional medical devices such as CT and MRI machines”, said the officials. The rules require AI tools to be tested and validated with Indian patients to ensure real-world accuracy and safety.

Health-tech companies and start-ups must establish a robust quality management system and follow strict post-launch surveillance protocols. This includes mandatory reporting of any adverse events, such as incorrect diagnoses resulting from algorithm errors.

Industry experts believe that the new compliance might challenge smaller developers. This could slow down innovation in AI-driven clinical practices. However, regulators say the safeguards are intended to protect patient welfare with widespread inculcation of AI in medical care.

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Implications for the Health-Tech Sector

This regulatory move comes as a long-standing gap in Indian health-tech governance. Presently, India has many AI diagnostic tools operating in a regulatory grey zone without formal clinical approval. Developers often categorise these tools under’ research or wellness’, despite their use in clinical settings.

With the formal rules now in place, licensed AI medical software will be subject to the same oversight and compliance expectations as physical medical devices. The change is expected to affect both domestic start-ups and international firms seeking to deploy AI solutions in India’s healthcare market.

Healthcare analysts say clearer regulation should improve patient confidence and align India with global trends in overseeing high-risk AI applications in medicine.