A business that deploys AI agents on personal data in India is the data fiduciary under the DPDP Act, and the vendor running the agents is usually its processor. The fiduciary stays responsible for lawful grounds, notice, accuracy, security, breach notification, erasure, grievances and the processor contract. Significant data fiduciaries add impact assessments, audits and due diligence on algorithmic software.
What does the Act require of a data fiduciary, in plain words?
Under the Digital Personal Data Protection Act 2023, the data fiduciary is whoever determines the purpose and means of processing personal data. In substance, the fiduciary must:
- comply with the Act whatever its agreements with others say, including for processing carried out by its processors;
- engage processors only under a valid contract;
- process data on consent or a listed legitimate use, with proper notice;
- ensure data used in decisions about the data principal is complete, accurate and consistent;
- take reasonable security safeguards, including over its processors;
- notify personal data breaches to the Data Protection Board and to each affected data principal;
- erase data, and have its processors erase it, once the purpose is served or consent is withdrawn, unless retention is legally required;
- publish contact details for data questions and run grievance redressal.
The government can designate significant data fiduciaries based on factors such as the volume and sensitivity of data and the risk to data principals. They must appoint a data protection officer based in India, appoint an independent data auditor, and carry out periodic impact assessments and audits. Rules under the Act add due diligence expectations for significant fiduciaries, including on algorithmic software; check the current text.
Who counts as the fiduciary when agents are involved?
The business that decides to use the agent and for what. The agent itself is never the fiduciary; it is a tool. The vendor is typically a processor, acting on the business's instructions. The model provider behind the vendor processes data too, and the fiduciary should know about it, since its security and erasure duties extend through the chain.
A vendor that uses customer data for its own purposes, such as improving models for other clients, may be acting as a fiduciary in its own right for that processing. That changes the analysis and should be prevented by contract unless agreed.
Deployer duties in other regimes follow similar lines. Compare what the EU AI Act requires deployers of agents to do and Colorado AI act duties for deployers.
What do the duties mean when an agent does the processing?
Responsibility through the vendor. "The vendor's agent did it" is not a defence. If the agent discloses a customer's data to the wrong person, the fiduciary has a breach to notify.
Accuracy of what agents produce. An agent that summarises a loan applicant's bank statements has created data used in a decision. If the summary misreads income, the fiduciary has failed the accuracy duty.
Security in the agent's design. Reasonable safeguards for agents include least-privilege access, protection against injected instructions in content the agent reads, and credentials the agent cannot see.
Erasure through the chain. Erasure must reach the vendor's stores, the model provider if it retains data, and the agent's own memory and indexes.
Algorithmic due diligence. A significant fiduciary deploying agents should be able to show it checked that the agents are not likely to harm data principals' rights. Testing the agent on the fiduciary's own cases is the most direct evidence.
How does a fiduciary meet its duties for agents?
| Requirement | Control | Evidence it leaves |
|---|---|---|
| Responsible regardless of contracts | Agent programme owned by a named executive; data protection officer consulted | Ownership record and sign-offs |
| Valid processor contract | Contract binds vendor and its model provider to instructions, security and erasure; no use for others | Signed contract and sub-processor list |
| Lawful ground and notice | Each agent capability mapped to consent or a legitimate use | Purpose map and notice versions |
| Accuracy for decisions | Agent-derived data traceable to sources and reviewed before decisions | Records linking outputs to sources |
| Security safeguards | Least privilege, injection testing, credential protection | Access reviews and test reports |
| Breach notification | Agent incidents assessed for personal data breach | Assessments and notifications |
| Erasure through the chain | Erasure requests propagated to vendor, model provider and agent stores | Erasure confirmations |
| Grievance redressal | Agent may triage; staff resolve | Grievance register |
| Significant fiduciary duties | Impact assessment and audit include agents; due diligence on agent behaviour | Assessment, audit report and test results |
Consent mechanics are covered in DPDP Act consent and AI agents.
What will the Board or an auditor ask?
- Who is the fiduciary for this agent's processing, and who is the processor?
- Does your vendor or its model provider use your customers' data for anything else?
- How do you check the accuracy of what the agent produces before it drives a decision?
- When a customer asks for erasure, how do you confirm the vendor and model provider complied?
- If you are a significant data fiduciary, what due diligence did you do on the agent?
What do the fiduciary duties not cover?
They do not regulate the agent's fairness or conduct beyond data protection; sector regulators such as RBI, SEBI and IRDAI address conduct. They do not apply to data outside the Act's scope, such as non-digital records. They do not transfer to the vendor because a contract says so. For the cross-border view, see AI agent regulation mapped to controls.
This is an explanation of the rules, not legal advice; confirm how they apply to you with counsel.
Questions people ask
Can the agent vendor be a joint fiduciary?
If it decides purposes and means of processing alongside you, or uses the data for its own purposes, it may be a fiduciary for that processing. Contracts should make roles clear and prevent unagreed uses.
Does a significant fiduciary need to audit its agents?
Its periodic impact assessments and audits should cover processing by agents, since agents are part of how it processes personal data.
What if the model provider is outside India?
Transfers are allowed except to countries the government restricts. The fiduciary's duties continue, so the contract must carry security and erasure obligations to the provider.