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Wednesday, May 6, 2026
India’s business-technology cycle opens with a pair of strategic shifts. Banks are redrawing their UPI plans now that merchant payments above ₹2,000 will again carry a fee, and India’s software exporters are bracing for as much as $20 billion in lost revenue as Big Tech uses AI to trim outsourcing budgets. Two consumer internet companies are also moving closer to public listings.
India’s banks are dusting off product road maps that had stalled for years. The reason: the merchant discount rate, or MDR, is coming back to UPI. From October 15, eligible merchant payments above ₹2,000 will attract a 40-basis-point charge. For U.S. readers, MDR is the fee paid on digital merchant transactions, split between the bank that processes the merchant and the bank that handles the customer.
Goldman Sachs forecasts the pool could reach ₹26,200 crore, or roughly $3 billion, by fiscal 2028. About ₹13,100 crore of that would flow to banks that handle customer-side payments. That projected revenue is changing how banks prioritize UPI-related work.
Payment companies can build the interface layer, but products cannot scale until banks integrate systems, test transaction flows, and install the right controls. During the zero-MDR period, that integration work created cost without transaction-linked income, so it tended to sit below more urgent priorities. Now that every eligible merchant transaction can generate fee income, budgets and timelines are being revisited.
Three product categories are expected to move beyond pilots:
The MDR return is not just a pricing event. It is an incentive reset that gives banks a direct financial reason to make UPI more than a consumer-to-consumer payments rail.
India’s largest software services exporters face a tough couple of years. Industry experts warn that Google, Meta, and other major technology companies are scaling back traditional IT outsourcing budgets as AI and automation improve internal efficiency. That could put up to $20 billion in annual contracts at risk over the next one to two years.
The danger is concentrated in the high-tech and communications segments of India’s roughly $315 billion IT industry. A 15-20% reduction in outsourcing spend could translate into $12-20 billion of revenue under pressure, according to estimates built on Nasscom’s 2025-26 IT services revenue forecast of $149 billion. Of that, roughly 55-70%, or $80-100 billion, comes from outsourcing.
Phil Fersht, chief executive of U.S.-based research and consulting firm HFS Group, says the technology sector is only the starting point. “Big Tech is doing this first because it has the AI capability to do it. Once banks, retailers, manufacturers and healthcare companies become confident they can take 15-20% of effort out of mature outsourcing contracts, the same pressure will spread well beyond the technology vertical.”
The contraction is expected to be steepest in labor-intensive work: testing and routine application support, engineering support, business process outsourcing, trust and safety operations, and customer experience management.
For U.S. companies that buy IT services from India, the immediate signal is clearer: mature outsourcing contracts are moving from volume-based pricing to productivity-based pricing. Vendors that can demonstrate AI-led savings may protect their revenue, but low-end headcount-heavy work will face steady pressure.
Tiger Global-backed used-car platform Spinny has filed confidentially with India’s capital markets regulator, Sebi, for an initial public offering. The company is targeting a total issue size of ₹3,000-3,500 crore, or roughly $350-410 million, according to people aware of the matter.
The issue is expected to be split almost evenly between fresh capital and an offer for sale by existing investors. Spinny may use the fresh funds to expand its physical and digital footprint across India.
The IPO follows a February funding round of $160-170 million led by U.S.-based investors Fidelity and Accel Leaders Fund, as ET previously reported. That round included about $90 million of primary capital, with the rest made up of secondary sales by early investors. Fidelity and WestBridge Capital also bought shares through the secondary portion.
Spinny has been consolidating its position in the used-car market. Last November, it acquired vehicle servicing startup GoMechanic in a ₹450-crore cash-and-stock deal, widening its post-sale service offerings.
Snapdeal’s parent company, AceVector, has set a price band of ₹30-32 per share for its upcoming IPO. At the upper end, the company would be valued at ₹1,741 crore, or around $182 million.
The IPO includes a fresh issue of ₹287 crore and an offer-for-sale component worth ₹133 crore. SoftBank, Nexus Venture Partners, and Foxconn are among the investors selling shares in the offer-for-sale.
The valuation is a striking contrast with Snapdeal’s peak of $6.5 billion in 2016, after SoftBank invested $1 billion. Snapdeal was moved under the AceVector umbrella in 2022, and the public-market pricing reflects a much leaner e-commerce business and a more disciplined environment for Indian consumer internet companies.
Captain Fresh, a B2B seafood marketplace, reported consolidated net profit of ₹19.6 crore for fiscal year 2026, down from ₹42.4 crore in the previous fiscal year. The audited annual report shows the bottom line was squeezed by three factors: ₹30 crore in one-time IPO expenses, a move from a net tax credit to a net tax expense, and wider losses from discontinued domestic operations.
The company’s core business remains intact, but the swing is a reminder that going public carries direct near-term earnings costs.
IPO-bound manufacturing platform Zetwerk and U.S.-based power equipment maker Ayr Energy have settled their legal disputes after more than a year. The two companies had accused each other of misusing confidential information and trade secrets. Terms of the settlement were not disclosed.
The agreement clears a potential overhang for Zetwerk as it prepares for its public listing.
The global conversation on tech and AI is also worth a quick scan. The Financial Times asks whether AI CEOs should be the ones defining what society needs. Rest of World argues that America is competing with China in the wrong AI race. And Wired’s survey of 634 women working in tech gives a candid look at the industry’s persistent inclusion problem.
The morning’s stories share a common thread: India’s digital economy is moving from free-user acquisition to revenue discipline. Whether it is UPI charging for merchant transactions, Big Tech squeezing outsourcing costs, or startup IPOs pricing below frothy private-market peaks, the incentives are shifting in the same direction — toward sustainable economics.
