The Indian government has approved a Rs 1,300 incentive scheme to boost the usage of RuPay debit cards and low value BHIM-UPI transactions in India. As a part of the scheme, the government will pay a percentage of value of transactions done via RuPay debit cards and BHIM-UPI mode for a period of one year, backdated to being April 1, 2021. The scheme would cover reimbursement of processing fee on digital transactions up to Rs 2,000.
The move will bolster the use of RuPay debit cards and BHIM-UPI digital transactions and strengthen the digital payments ecosystem in India. In a release the government said that the move will also help in making accessible digital modes of payments to unbanked and marginalized populations, who are outside of the formal banking and financial system. “The scheme will further spur research and development and innovation in the fintech space, and will help the Government in further deepening digital payments in various parts of the countries,” the government added in a release.
Notably, the announcement comes shortly after Visa complained to the US government that India’s ‘formal and informal’ promotion of rival RuPay was hurting the company in a key market. Mastercard, which is another major payment network provider in India, has also raised similar concerns with the US Trade Representative (USTR) privately. The company, back in 2018, had told the US government that PM Modi was using nationalism to promote the use of domestic payments network provider, RuPay.
RuPay accounted for 63% of India’s 952 million debit and credit cards as of November 2020, as per the regulatory data shared by RBI, which is up from 15% in 2017.
Separately, the Union Cabinet has also approved incentives worth Rs 76,000 crore for the development of semiconductors and display manufacturing ecosystem in India. With this development, the Indian government wants to boost manufacturing of semiconductor fabs, display fabs, sensors, semiconductor packaging, compound semiconductors, and semiconductor design in India. In addition to this, the government also plans to train 85,000 to 100,000 technicians and engineers to work in these manufacturing facilities.
