From digital public infrastructure to regulatory sandboxes, India can redefine governance through real-world experimentation
India’s governance story over the past decade has been defined by the idea of “scale". From financial inclusion to digital service delivery, the country has demonstrated an immense ability to design and implement systems that reach millions. Flagship initiatives such as Aadhaar, covering over 1.44 billion people, alongside more than 58.12 crore Jan Dhan accounts and 21.7 billion UPI transactions in January 2026 alone, illustrate this unprecedented scale. Yet, as governance challenges grow more complex and technology cycles accelerate, scale alone is no longer sufficient. The next frontier lies in experimentation: structured, iterative, and real-world testing of policies and systems.
This shift raises an important question: can India evolve from a state that delivers at scale to one that experiments at scale? In other words, can it become a “testbed state”—a global sandbox for public innovation?
A “testbed state” is one where policy design, regulation, and service delivery are continuously validated through real-world experimentation, supported by data-driven feedback loops and adaptive governance mechanisms.
Traditional governance architecture follows a linear sequence: policy design, implementation, and then evaluation, premised on the idea that rules can be perfected before deployment. That assumption no longer holds. In domains such as digital governance, climate adaptation, and finance, policy problems are too dynamic for static solutions. This has elevated the relevance of regulatory sandboxes, which allow innovations to be tested in controlled, real-world environments under supervision, generating evidence before wider rollout.
The Reserve Bank of India’s sandbox framework enables firms to test products with real users under defined conditions alongside the Interoperable Regulatory Sandbox (IoRS), which enables cross-sector testing through a single-window interface, reducing fragmentation and accelerating innovation cycles.
India has already embraced this shift in scope and sophistication, particularly in finance. In finance, multiple regulators now operate sandbox frameworks that balance innovation with oversight, allowing controlled testing with limited users and regulatory flexibility. The Reserve Bank of India’s sandbox framework enables firms to test products with real users under defined conditions alongside the Interoperable Regulatory Sandbox (IoRS), which enables cross-sector testing through a single-window interface, reducing fragmentation and accelerating innovation cycles. At the same time, the Insurance Regulatory and Development Authority of India’s 2025 regulations seek to improve efficiency and ease of doing business. In 2025, the Reserve Bank of India launched a retail sandbox for its central bank digital currency, enabling real-world testing of digital rupee use cases. The underlying principle is clear: policy and innovation must co-evolve. Instead of waiting for perfect regulation, systems can be iteratively tested, refined, and scaled.
This experimental approach is now spreading beyond finance into sectors such as health and emerging technologies, including Artificial Intelligence (AI), reflecting a broader shift toward policy prototyping. In the context of AI, this includes emerging needs for algorithmic audits, bias testing, and governance sandboxes to ensure responsible deployment. Notably, emerging subnational initiatives, such as open-access quantum computing testbeds in Andhra Pradesh, signal that this logic is extending beyond traditional sectors. Similarly, Karnataka has also proposed a regulatory sandbox for innovation. Taken together, these developments suggest that India is moving from sector-specific experimentation toward a more integrated and systemic sandbox architecture. Yet what defines a true “testbed state” is not isolated pilots, but the systematic integration of experimentation into the governance architecture itself. This marks a shift from a traditional “regulatory state” toward an adaptive, learning-oriented model.
India’s potential to evolve into a “testbed state” is anchored in a unique convergence of structural, technological, and institutional strengths. These foundations not only enable experimentation at scale but also distinguish India as a setting where innovation can be tested, refined, and deployed with real-world impact. Unlike smaller but advanced digital states such as Singapore or Estonia, which excel in governance innovation but lack scale, or large systems like China, where experimentation is less open, India combines scale with institutional pluralism and relative regulatory openness.
India’s potential to evolve into a “testbed state” is anchored in a unique convergence of structural, technological, and institutional strengths.
India’s emergence as a potential “testbed state” rests on structural reality rather than rhetoric. Its scale, over 1.4 billion people, combined with strategic internal diversity, creates multiple socio-economic contexts within a single national framework. From dense urban centres to peri-urban transitions and vast rural regions, varied policy environments allow solutions to be tested, adapted, and scaled without crossing borders. In effect, India serves as a microcosm of the Global South, enabling real-world validation on an unparalleled scale and unparalleled diversity. This positions India not only as a domestic innovator but as a potential policy laboratory for other developing economies facing similar structural constraints.
This scale becomes actionable through a robust digital backbone. Foundational systems such as Aadhaar, UPI, and the broader India AI Stack have produced one of the world’s most advanced digital public infrastructure. They enable low-cost identity verification, seamless transactions, and mostly consent-based data sharing, allowing services to be rapidly deployed, monitored in real time, and iteratively refined—significantly reducing the friction that typically constrains large-scale experimentation in many parts of the world. However, this also raises important questions about data privacy, surveillance risks, amongst others.
India’s federal structure further amplifies this capacity by enabling decentralised experimentation. States, with autonomy in sectors like health, education, and local governance, act as policy laboratories, generating diverse approaches from social development models to industrial strategies. In emerging domains such as artificial intelligence, this allows multiple regulatory and application pathways to be tested simultaneously. Such competitive yet collaborative federalism fosters innovation that is distributed rather than centrally dictated. At the same time, variations in state capacity can create uneven outcomes, underscoring the need for institutional strengthening.
Compared to advanced economies, India offers significantly lower costs of experimentation across labour, infrastructure, and operations, attracting both domestic and global innovators. Combined with a large and increasingly digital user base, this ensures that experiments can move swiftly from pilot to meaningful scale. Together, these factors—scale, diversity, digital infrastructure, federal flexibility, and cost advantage—position India uniquely in the global innovation landscape. However, challenges such as low labour productivity exist. There is also a risk that sandbox environments may disproportionately benefit larger firms, raising concerns about regulatory capture and equitable access for startups.
Variations in state capacity can create uneven outcomes, underscoring the need for institutional strengthening.
Yet this potential is not automatic. Realising it requires regulatory foresight, robust data governance, and a commitment to inclusion and quality advancement. Without these, the same conditions that enable experimentation could also amplify inequality or policy risk. The opportunity is immense, but so is the responsibility to shape it with intent.
India’s sandbox initiatives are significant but remain fragmented and generally sector-bound. To evolve into a true testbed state, experimentation must move from the margins to the core of governance. This requires reimagining policy, not as a fixed set of rules, but as a continuous process of testing, learning, and adaptation.
Broadly, three shifts are central to this transition. First, from episodic to continuous experimentation: replacing fixed-cohort sandboxes with “on-tap” models that allow rolling entry, faster feedback, and alignment with the pace of technological change. Second, from sectoral silos to cross-domain innovation: enabling interoperable, multi-sector testing to reflect the interconnected nature of real-world challenges and reduce regulatory blind spots. Third, from reactive regulation to co-creation: embedding collaboration among regulators, innovators, and users from the outset, so that policy evolves alongside practice. Together, these shifts transform the state from a gatekeeper into an active shaper of innovation and change.
Realising this vision requires a coherent national strategy that embeds experimentation across governance systems and institutions of different levels. Sandbox frameworks must hold a momentum to expand beyond finance in a rapid phase into sectors such as urban and rural governance, climate adaptation, public health, and mobility, creating a truly multi-sector integrated experimentation ecosystem. Equally critical is the development of secure, interoperable data-sharing systems to enable real-time feedback and iterative policy refinement. This must be complemented by robust legal and regulatory architectures, including time-bound regulatory waivers, clear liability frameworks, and defined pathways for scaling successful pilots, ensuring that experimentation is systematic rather than ad hoc. In parallel, independent evaluation mechanisms, through academia and third-party institutions, should be embedded to generate credible evidence, supported by standardised metrics and transparent public reporting of outcomes.
Equally critical is the development of secure, interoperable data-sharing systems to enable real-time feedback and iterative policy refinement.
Moreover, a stronger centre–state collaboration is essential. States should be empowered to design context-specific experiments, while the Union government provides coordination and knowledge-sharing platforms. This would create a federated testbed model—combining national coherence with local flexibility and enabling experimentation to scale effectively across India’s diverse contexts. This should be backed with strategically aligned linkages, including University-Industry connect, curriculum revision, and partnerships. To support this, a national knowledge repository should systematically capture sandbox outcomes, best practices, and failure case studies, enabling cross-state learning and preventing duplication. Equally important is sustained investment in institutional capacity, including training civil servants in data analysis, experimental methods, and technology governance, alongside the creation of dedicated innovation units within ministries and state governments.
Finally, enabling a testbed state requires aligned financial and governance enablers. Dedicated innovation funds, outcome-based financing models, and public–private co-funding mechanisms are essential to scale experimentation beyond pilot stages. Procurement reforms, such as flexible norms and fast-track approvals, must be introduced to allow startups and innovators to effectively participate in public problem-solving. At the same time, strong citizen-centric safeguards are critical, including informed consent frameworks, grievance redress systems, transparency dashboards, and inclusion audits to ensure accessibility across regions and populations. Without these trust and inclusion mechanisms, the expansion of experimentation risks exacerbating exclusion rather than advancing equitable innovation.
India’s governance journey is entering a new phase. The first step was about building systems at scale—expanding access, infrastructure, and service delivery. The next step will be refining these systems through continuous experimentation to keep them responsive, efficient, and aligned with evolving needs and aspirations. The idea of a “testbed state” captures this shift: from implementation to iteration, from policy certainty to adaptive design, and from national delivery to global contribution. Policies are no longer fixed endpoints but evolving frameworks, improved through real-world testing and feedback.
India has already taken steps in this direction through regulatory sandboxes, cross-sector initiatives, and state-level experiments, but these remain fragmented. The challenge now is to integrate them into a coherent architecture of public innovation, where learning is shared, and experimentation is continuous.
The insights generated, particularly in addressing inequality and complexity, can inform global governance, allowing India to help redefine how nations approach innovation, regulation, and public problem-solving in the twenty-first century.
If achieved, this transition would do more than improve governance at home. It could redefine India’s global role—not just as a market or technology hub, but as a living laboratory and leader for solving complex challenges in an increasingly interconnected world. The emergence of such a testbed state extends beyond domestic governance, positioning India as a platform where public policy can be imagined, tested, and refined. As countries worldwide grapple with regulating emerging technologies, ensuring inclusion, and managing complex transitions—often without adequate scale or flexibility—India’s diversity, digital infrastructure, and evolving regulatory frameworks enable it to serve as a real-world laboratory for large-scale experimentation. The insights generated, particularly in addressing inequality and complexity, can inform global governance, allowing India to help redefine how nations approach innovation, regulation, and public problem-solving in the twenty-first century.
Amal Chandra is an Indian author, public policy analyst, and political commentator.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
Amal Chandra is an Indian author, public policy analyst, and political commentator. His debut book, The Essential (2023), launched by Dr. Shashi Tharoor— with whom ...
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