Trade talks between the US and India appear to be facing some challenges as the US calls out India’s UPI payment system saying it is making things tough for American companies.
US Criticizing India’ UPI & Tricky Rules in Finance and Telecom
We are talking about the 2026 National Trade Estimate Report, where the United States Trade Representative (USTR) pointed to structural issues in India’s Unified Payments Interface (UPI) ecosystem, alongside regulatory challenges for digital platforms.
In addition to this, the US is also not happy about India’s rules on where companies must store their data as according to them, it makes fraud harder to spot and drive up costs for global businesses.
In this report, they also talk about the high tariffs on things like farm products, plus tricky rules in sectors like finance and telecom.
It seems that the import licensing hassles and internet shutdowns are making it harder for foreign businesses to operate smoothly in India.
Moving ahead, the US hopes that the newly drawn agreements will help level the playing field, while protecting its companies working there.
On the topic of digital payments, the report noted, “The United States continued to raise concerns relating to informal and formal policies with respect to electronic payments services that appear to favor Indian domestic suppliers over foreign suppliers, creating a non-level playing field.”
The National Payments Corporation of India (NPCI), which operates UPI and RuPay, has created barriers for foreign players, highlighted in the USTR.
They have specifically flagged concerns over limited participation by US firms, noting “concerns related to the inability of US electronic payment services suppliers to participate in the UPI ecosystem… on a level playing field with RuPay.”
Moving further, the report referenced the proposed 30% market share cap for third-party app providers on UPI, which has been deferred but remains a point of concern for foreign firms.
Apart from this, the USTR also flagged India’s data localisation rules for financial services, saying such requirements “hamper the ability of service suppliers to detect fraud and ensure the security of global networks.”
India Streamline Content Takedown Process
The report also raised issues with India’s digital regulations, saying the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, impose significant compliance burdens.
Further adding that these rules “impose personal criminal liability on individual employees” and include “impractical compliance deadlines and take-down protocols.”
“US firms have been subject to an increasing number of takedown requests for content and user accounts related to issues that appear politically motivated,” USTR added, saying US companies have faced growing scrutiny.
In this report, they have acknowledged the recent amendments to India’s takedown framework, further noting updated rules now require that only senior officials can order content removal and that such orders must clearly explain the legal justification and specify the content.
These USTR’s observations are coming as the country has moved to streamline its content takedown process and following a recent surge in takedown requests amid growing concerns over misinformation and deepfakes.
While defending the move, the Union IT Minister Ashwini Vaishnaw said that the government’s approach is a response to the rise of deepfakes.
Further adding, “A lot of content has started coming in the nature of deepfakes… a huge quantity of deepfakes have started coming in the social media, the platforms have also ramped up their removal efforts.”
