US flags ‘non-level playing field’ in India’s UPI, raises concerns over IT rules and rising takedown orders

The United States has raised fresh concerns over India’s digital ecosystem, flagging what it called a “non-level playing field” in the country’s fast-growing payments market and warning that IT rules governing online platforms could burden global tech firms.

In its 2026 National Trade Estimate Report on Foreign Trade Barriers, the Office of the United States Trade Representative (USTR) pointed to structural issues in India’s Unified Payments Interface (UPI) ecosystem, alongside regulatory challenges for digital platforms.

On digital payments, the report said, “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 USTR highlighted that the National Payments Corporation of India (NPCI), which operates UPI and RuPay, has created barriers for foreign players. It 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.” 

The report also 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.

At the same time, the USTR 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.” 

IT rules and takedown concerns

On India’s digital regulations, the report raised issues with the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, saying they impose significant compliance burdens.

It noted that the rules “impose personal criminal liability on individual employees” and include “impractical compliance deadlines and take-down protocols.” 

The USTR added that US companies have faced growing scrutiny, stating “US firms have been subject to an increasing number of takedown requests for content and user accounts related to issues that appear politically motivated.” 

The report also acknowledged recent amendments to India’s takedown framework. It said 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. 

The USTR’s observations come as India has moved to streamline its content takedown process. This follows a recent surge in takedown requests amid growing concerns over misinformation and deepfakes.

Union IT Minister Ashwini Vaishnaw has defended the government’s approach, calling it a response to the rise of deepfakes.

“A lot of content has started coming in the nature of deepfakes… a huge quantity of deepfakes have started coming in the social media,” Vaishnaw said recently, adding that platforms have also ramped up their removal efforts.