It is expected that India's flagship digital identity infrastructure, the Aadhaar, will undergo significant changes to its regulatory framework in the coming days following a formal amendment to the Aadhaar (Targeted Determination of Services and Benefits Management) Regulations, 2.0.
Introducing a new revision in the framework makes facial authentication formally recognized as a legally acceptable method of verifying a person's identity, marking a significant departure from traditional biometric methods such as fingerprinting and iris scans.
The updated regulations introduce a strong compliance framework that focuses on explicit user consent, data minimisation, and privacy protection, as well as a stronger compliance architecture. The government seems to have made a deliberate effort to align Aadhaar's operational model with evolving expectations about biometric governance, data protection, and the safe and responsible use of digital identity systems as they evolved.
In the course of undergoing the regulatory overhaul, the Unique Identification Authority of India has introduced a new digital identity tool called the Aadhaar Verifiable Credential in order to facilitate a secure and tamper-proof identity verification process.
Additionally, the authority has tightened the compliance framework governing offline Aadhaar verification, placing higher accountability on entities that authenticate identities without direct access to the UIDAI system in real time.
Aadhaar (Authentication and Offline Verification) Regulations, 2021 have been amended to include these measures, and they were formally published by the UIDAI on December 9 through the Gazette as well as on UIDAI's website.
UIDAI has also launched a dedicated mobile application that provides individuals with a higher degree of control over how their Aadhaar data is shared, which emphasizes the shift towards a user-centric identity ecosystem which is also concerned with privacy.
According to the newly released Aadhaar rules, the use of facial recognition as a valid means of authentication would be officially authorised as of the new Aadhaar rules, while simultaneously tightening consent requirements, purpose-limitations, and data-use requirements to ensure compliance with the Digital Personal Data Protection Act.
In addition, the revisions indicate a substantial shift in the scope of Aadhaar's deployment in terms of how it is useful, extending its application to an increased range of private-sector uses under stricter regulation, so as to extend its usefulness beyond welfare delivery and government services.
This change coincides with a preparation on the part of the Unique Identification Authority of India to launch a newly designed mobile application for Aadhaar.
As far as officials are concerned, the application will be capable of supporting Aadhaar-based identification for routine scenarios like event access, registrations at hotels, deliveries, and physical access control, without having to continuously authenticate against a central database in real-time.
Along with the provisions in the updated framework that explicitly acknowledge facial authentication and the existing biometric and one-time password mechanisms, the updated framework is also strengthening provisions governing offline Aadhaar verification, so that identity verification can be carried out in a controlled manner without direct connection to UIDAI's systems.
As part of the revised framework, offline Aadhaar verification is also broadened beyond the limited QR code scanning that was previously used.
A number of verification methods have been authorised by UIDAI as a result of this notification, including QR code-based checks, paperless offline e-KYC, Aadhaar Verifiable Credential validation, electronic authentication through Aadhaar, and paper-based offline verification.
Additional mechanisms can be approved as time goes by, with the introduction of the Aadhaar Verifiable Credential, a digitally signed document with cryptographically secure features that contains some demographic data. This is the most significant aspect of this expansion.
With the ability to verify locally without constantly consulting UIDAI's central databases, this credential aims to reduce systemic dependency on live authentication while addressing long-standing privacy and data security concerns that have arose.
Additionally, the regulations introduce offline face verification, a system which allows a locally captured picture of the holder of an Aadhaar to be compared to the photo embedded in the credential without having to transmit biometric information over an external network.
Furthermore, the amendments establish a formal regulatory framework for entities that conduct these checks, which are called Offline Verification Seeking Entities.
The UIDAI has now mandated that organizations seeking to conduct offline Aadhaar verification must register, submit detailed operational and technical disclosures, and adhere to prescribed procedural safeguards in order to conduct the verification.
A number of powers have been granted to the authority, including the ability to review applications, conduct inspections, obtain clarifications, suspend or revoke access in the case of noncompliance.
In addition to clearly outlining grounds for action, the Enforcement provisions also include the use of verification facilities, deviation from UIDAI standards, failure to cooperate with audits, and facilitation of identity-related abuse.
A particularly notable aspect of these rules is that they require affected entities to be provided an opportunity to present their case prior to punitive measures being imposed, reinforcing the idea of respecting due process and fairness in regulations.
In the private sector, the verification process using Aadhaar is still largely unstructured at present; hotels, housing societies, and other service providers routinely collect photocopies or images of identity documents, which are then shared informally among vendors, security personnel, and front desk employees with little clarity regarding how they will retain or delete those documents.
By introducing a new registration framework, we hope to replace this fragmented system with a regulated one, in which private organizations will be formally onboarded as Offline Verification Seeking Entities, and they will be required to use UIDAI-approved verification flows in place of storing Aadhaar copies, either physically or digitally.
With regard to this transition, one of the key elements of UIDAI's upcoming mobile application will be its ability to enable selective disclosure by allowing residents to choose what information is shared for a particular reason. For example, a hotel may just receive the name and age bracket of the guest, a telecommunication provider the address of the guest, or a delivery service the name and photograph of the visitor, rather than a full identity record.
Aadhaar details will also be stored in the application for family members, biometric locks and unlocks can be performed instantly, and demographic information can be updated directly, thus reducing reliance on paper-based processes. As a result, control is increasingly shifting towards individuals, minimizing the risk of exposure that service providers face to their data and curbing the indefinite circulation of identity documents.
UIDAI has been working on a broader ecosystem-building initiative that includes regulatory pushes, which are part of a larger effort. In November, the organization held a webinar, in which over 250 organizations participated, including hospitality chains, logistics companies, real estate managers, and event planners, in order to prepare for the rollout.
In the midst of ongoing vulnerability concerns surrounding the Aadhaar ecosystem, there has been an outreach to address them.
Based on data from the Indian Cyber Crime Coordination Centre, Aadhaar Enabled Payment System transactions are estimated to account for approximately 11 percent of the cyber-enabled financial fraud of 2023, according to the Centre's data.
Several states have reported instances where cloned fingerprints associated with Aadhaar have been used to siphon beneficiary funds, most often after public records or inadequately secure computer systems have leaked data.
Aadhaar-based authentication has been viewed as a systemic risk by some privacy experts, saying it could increase systemic risks if safeguards are not developed in parallel with its extension into private access environments.
Researchers from civil society organizations have highlighted earlier this year that anonymized Aadhaar-linked datasets are still at risk of re-identification and that the current data protection law does not regulate anonymized data sufficiently, resulting in a potential breakdown in the new controls when repurposing and processing them downstream.
As a result of the amendments, Aadhaar's role within India's rapidly growing digital economy has been recalibrated, with greater usability balanced with tighter governance, as the amendments take into account a conscious effort to change the status of the system. Through formalizing offline verification, restricting the use of data through selective disclosure, and imposing clearer obligations on private actors, the revised regulations aim to curb informal practices that have long contributed to increased privacy and security risks.
The success of these measures will depend, however, largely on the disciplined implementation of the measures, the continued oversight of the regulatory authorities, and the willingness of industry stakeholders to abandon legacy habits of indiscriminate data collection.
There are many advantages to the transition for service providers. They can reduce compliance risks by implementing more efficient, privacy-preserving verification methods.
Residents have a greater chance of controlling their personal data in everyday interactions with providers.
As Aadhaar leaves its open access environments behind and moves deeper into private circumstances, continued transparency from UIDAI, regular audits of verification entities, and public awareness around consent and data rights will be critical in preserving trust in Aadhaar and in ensuring that convenience doesn't come at the expense of security.
There has been a lot of talk about how large-scale digital identity systems can evolve responsibly in an era where data protection expectations are higher than ever, so if the changes are implemented according to plan, they could serve as a blueprint for future evolution.
