This paper examines the adequacy of India’s copyright and intermediary liability framework in responding to the challenges posed by algorithmically driven digital platforms and the use of copyrighted material in artificial intelligence training datasets. The research problem arises from the growing disjunction between the reactive, notice-based regime under the Copyright Act, 1957 and the Information Technology Act, 2000, and the systemic realities of content curation, recommendation and large-scale machine learning. While judicial decisions such as Eastern Book Company v. D. B. Modak and MySpace Inc. v. Super Cassettes Industries Ltd have clarified originality standards and the contours of “actual knowledge”, they do not resolve whether intermediaries that algorithmically promote infringing content retain safe-harbour protection, nor whether the ingestion of protected works for AI model training constitutes infringement under Indian law. This study adopts a doctrinal and comparative research methodology. Primary sources include Indian statutes, rules and leading judicial precedents, while secondary sources comprise academic literature, policy reports and comparative materials from the European Union, the United States and Germany. Through analytical synthesis, the paper evaluates the effectiveness of India’s current notice-and-takedown framework and assesses the suitability of foreign models such as the EU’s text and data mining exceptions and collective licensing mechanisms. The key finding is that Indian law remains structurally ill-equipped to regulate algorithmic promotion of infringing content and AI-training datasets. The absence of statutory clarity creates uncertainty for creators, intermediaries and developers alike. The paper concludes by recommending a calibrated reform package including clearer standards of “actual knowledge”, mandatory transparency obligations for large platforms, and a statutory or collective licensing framework for AI training datasets. These measures aim to balance effective copyright enforcement with constitutional values of free expression and innovation.