Does Art Law in India Require Regulation? Maybe.

India, a country with an unparalleled artistic heritage, faces unique legal challenges in regulating its growing art market. While existing laws protect antiquities and govern intellectual property, the lack of a dedicated regulatory body for art has led to gaps in dispute resolution, authentication, taxation, and trade compliance. Moreover the rise of digital art and NFTs has introduced complexities and intricacies that Indian laws are yet to fully address and dealt with. Without proper oversight, artists, collectors, and investors navigate a market that is often ambiguous and vulnerable to exploitation.

This article highlights these pressing issues and the crucial role of arbitration, mediation, and regulatory reforms in shaping a more structured and secure art ecosystem.

India's Art Industry at Loggerheads?

The Indian art industry remains largely unregulated, leading to issues such as forgery, misrepresentation, and an unclear dispute resolution mechanism. Without a formal authentication authority, buyers and collectors often struggle to verify the provenance of artworks, increasing the risk of fraud, duplicate art works . This lack of oversight has allowed counterfeit artworks to flood the market, eroding trust and making transactions riskier for both buyers and sellers.

Adding to these concerns is the absence of regulated pricing and taxation policies, making it difficult for artists and buyers to navigate legal obligations. Unlike other industries that benefit from structured oversight, art transactions in India remain fragmented, leading to inconsistent taxation and compliance challenges. Many deals occur in informal markets, where tax evasion and opaque pricing structures prevail.

Without a dedicated Art Regulatory Authority, buyers rely on informal networks for provenance verification, and disputes often escalate into prolonged litigation. The lack of streamlined governance and regulations in the art market highlights the requirement for a structured regulatory framework that can ensure transparency, fairness, and accountability in all aspects of art trade and ownership.

In India however, art arbitration looks at an interplay between, intellectual property rights and arbitration laws. As per the Arbitration and Conciliation Act, awards are unenforceable if they arise out of an “in-arbitrable” dispute. Art disputes involve issues of ownership, authenticity and copyright infringement, succession, and testamentary matter, therefore are often contested as being in-arbitrable

Art disputes often involve complex issues, including authorship claims, forgery allegations, and breach of contractual terms. Given the time-consuming nature of traditional litigation, arbitration and mediation have become preferred modes of dispute resolution in the global art market. These mechanisms provide a faster, more cost-effective, and confidential approach to resolving conflicts without jeopardizing artistic or commercial relationships. Mediation allows parties to reach a mutually acceptable settlement while preserving professional relationships. This is particularly useful in cases involving artist-gallery disputes, copyright infringements, and ownership claims. A mediated resolution ensures that creative partnerships remain intact, preventing long legal battles from hindering artistic growth.

Arbitration, on the other hand, ensures confidential, specialised, and enforceable decisions, making it ideal for high-value transactions. Art-related disputes often involve international parties, and arbitration provides a neutral forum for resolution. Institutions such as the Delhi International Arbitration Centre (DIAC) and Mumbai Centre for International Arbitration (MCIA) have begun handling art-related disputes, yet India still lacks dedicated arbitral rules for art transactions. By integrating alternative dispute resolution mechanisms into the art industry, India can ensure faster dispute resolution, and stronger legal safeguards for artists, collectors.

With the rise of blockchain technology, digital art and NFTs (Non-Fungible Tokens) have opened new avenues for artists to monetise their work. However, Indian law remains silent on key aspects, leading to challenges in ownership rights, resale royalties, and tax implications.

One of the biggest concerns is ownership rights who holds the copyright for an NFT, the artist or the buyer? Traditional art markets recognize artists' rights to their works, but if we talk about in the digital space, the legal standing of NFT ownership is still unregulated . More of that, there is ambiguity surrounding resale royalties, where artists often do not receive reward and compensation  when their NFT is resold in the secondary market. In the absence of clear legal provisions, artists are often at the mercy of marketplace policies.

Tax implications also remain undecided. Are NFTs classified as goods, securities, or digital assets under Indian law? The lack of proper classification results in taxation challenges, leaving buyers and sellers in a legal gray area. Without a defined legal framework, NFT transactions could potentially fall under multiple tax regulations, leading to confusion and unintended liabilities. A lack of regulation has led to instances of digital art theft, plagiarism, and unauthorized commercial use, leaving artists vulnerable. The rise of AI-generated art and digital manipulation further complicates the legal landscape.

The international art trade is heavily regulated, and India has multiple laws governing the import and export of artworks. However, enforcement gaps have led to a thriving underground market where valuable artifacts bypass legal scrutiny.

The Foreign Exchange Management Act (FEMA) 1999 governs cross-border transactions. Restrictions on foreign direct investment (FDI) in the art sector limit global collaborations, while compliance with Reserve Bank of India (RBI) regulations is mandatory.

The Goods and Services Tax (GST) applies to artworks. Original paintings and sculptures attract 12% GST, while prints and reproductions are taxed at 18% GST (Ministry of Finance, Government of India). High taxes encourage informal trade and underreporting, impacting transparency.

The Consumer Protection Act, 2019 protects buyers from misrepresentation and fraud, particularly in online sales (Department of Consumer Affairs, India). However, lack of a formal certification authority makes enforcement difficult. The Customs Tariff Act, 1975, governs import duties and requires special permits for antique exports (Central Board of Indirect Taxes and Customs). Stronger inter-agency collaboration is needed to curb illegal art trafficking and reclaim stolen heritage.

Conclusion

Art law in India is at a crossroads, requiring urgent regulatory intervention to balance cultural preservation with modern commercial needs. By establishing a dedicated regulatory body, modernizing legal frameworks, and integrating alternative dispute resolution mechanisms, India can create a more structured and globally competitive art market.