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In today’s newsletter:

• Sachin Bansal slams WhatsApp Pay, Amazon Pay
• Karnataka budget allocates Rs 300 cr for startups
• L&T Tech bets big on AI-led ER&D boom

P.S.: At the Moneycontrol Global Wealth Summit in Mumbai, SEBI Chief Tuhin Kanta Pandey, in his first-ever media appearance, joined top investors and policymakers to discuss steps for India’s financial future. Watch the recap here!

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Flipkart and Navi founder Sachin Bansal said that WhatsApp Pay and Amazon Pay did not succeed in Unified Payments Interface (UPI) as they saw the payments platform as a side feature rather than a centrepiece of their overall payments strategy.

"People have spent money but they haven’t done justice to UPI. Whether you look at Amazon Pay, Flipkart’s early attempts, or WhatsApp Pay, none of them made UPI a core focus," Bansal said.

Bansal surely knows what he is talking about. In less than nine months, Navi overtook large payment players such as Cred, Amazon Pay and WhatsApp Pay to become the fourth-largest UPI app in the country.

• The top three players dominate UPI: PhonePe, Google Pay and Paytm cornering 92% of the transactions

• Several apps tried and failed to crack the market despite massive investments and cashbacks

Of late, fintechs are more excited about UPI's credit opportunity. From linking Rupay credit cards to UPI and pre-approved personal loan credit lines to the customers’ UPI accounts is gaining traction.

• Today, more than 99% of UPI transactions are debit transactions

However, among card transactions, credit card spending is around thrice that of debit card transactions.

“The future of UPI is not debit. A significant part of UPI transactions will be powered by credit, not direct bank transfers. Payments will increasingly be made using a credit product, earning rewards and other benefits,” Bansal said.

From fostering deep-tech startups to expanding electric vehicle infrastructure, the Karnataka government has unveiled a series of initiatives in the 2025-26 state budget. 

The government has announced a Rs 300 crore Fund-of-Funds and Rs 100 crore deep-tech corpus as part of its 2025 budget.

• These investments are part of the broader Local Economy Accelerator Program (LEAP), launched with a total grant of Rs 1,000 crore

Also read: Bengaluru infra gets a boost as Karnataka budget doubles grant to Rs 7,000 cr

The state government is set to implement a new IT policy focusing on cloud computing and emerging technologies while expanding its tech footprint to tier II and III cities. 

• This policy will replace the existing 2020-2025 policy  

• The budget also proposes to set up a Centre for Applied AI for Tech Solutions (CATS) with a Rs 50 crore investment over five years

• Additionally, phase-2 of the Quantum Research Park, in collaboration with the Indian Institute of Science, Bengaluru, will receive a Rs 48 crore grant

Also read: Karnataka unveils new Tourism Policy 2024-29: Rs 8,000 crore investment, 1.5 lakh jobs targeted 

To strengthen its leadership in Global Capability Centres (GCCs), Karnataka will develop Mysuru, Belagavi, Dharwad, and Bengaluru as global innovation districts through KEONICS. 

• Three new Global Technology Centres will be established in Mangaluru, Hubli, and Belagavi, providing plug-and-play facilities

The state budget includes the creation of a state-of-the-art EV testing track and a dedicated EV cluster in the Bengaluru Zone. 

• The government aims to generate 1 lakh jobs and attract Rs 50,000 crore in investment

In a significant move to support the Kannada film industry, the government has announced a cap on movie ticket prices across all theatres in the state. 

• From now on, the price for each show, including multiplexes, will be capped at Rs 200

Engineering Research & Development (ER&D) is set to grow faster than traditional IT, says Amit Chadha, CEO of L&T Technology Services (LTTS). This is fueled by:

• Artificial intelligence
  
  
• Evolving compute
  
  
• Storage dynamics
  
  
• Supply chain restructuring

With IT executives admitting their traditional model is nearing disruption, Chadha’s ER&D statement assumes significance.

Chadha expects the ER&D market to hit $3 trillion in the coming years on the back of industrial automation and AI-driven efficiencies.

• He told us that AI and GenAI are no longer just tools but are fundamental to product development, testing, and sustenance

Over 30% of L&T Tech Services engineers are already trained in AI, and the company has filed 176 patents in the space.

ER&D’s resilience is coming into focus as IT services face headwinds.

• While some analysts question whether the sector can withstand global economic pressures, Chadha argues that ER&D is as strong—if not stronger—than IT.

Nevertheless, he acknowledges challenges in the automotive segment, especially in Germany, but expects a recovery within two quarters. 

Dig deeper

• Israel's military intelligence division has developed a capable ChatGPT-like AI system, based on millions of intercepted Palestinian communications. 
  
  
• The US State Department reportedly will use AI to revoke visas of foreign students who it perceives as supporters of Palestinian Hamas militants.

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