India’s payments and deep-tech funding landscape saw two separate developments on October 13, 2026. NPCI postponed a proposed Merchant Discount Rate (MDR) on select person-to-merchant (P2M) UPI payments until after Diwali, without announcing the replacement date. Separately, the government approved the first 19 managers for its Research, Development and Innovation (RDI) Fund, committing ₹7,131 crore through 14 alternative investment funds and five focused research organisations.
UPI MDR rollout moves beyond Diwali
NPCI’s UPI and Services Steering Committee deferred implementation of MDR on select P2M UPI transactions. The change had been scheduled for October 15, 2026; NPCI said the new implementation date would be notified separately and would fall immediately after Diwali. The postponement does not mean the proposed charge has been cancelled.
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NPCI’s institutional statement, quoted by Business Standard on October 13, said: “UPI and Services Steering Committee today decided that, keeping in mind the festive season, Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions, shall be implemented immediately post Diwali at a date to be notified separately.”
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What the reported proposal covers
The Economic Times reported a proposed 0.4% MDR on select eligible merchant transactions above ₹2,000. The report also estimated that more than 95% of UPI merchant transactions by volume would remain free. These are reported terms, not independently published NPCI tariff statistics, and the proposal applies to selected merchant categories and conditions rather than automatically to every payment above ₹2,000.
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MDR is a merchant-side fee paid to the bank or payment company handling an eligible transaction. The eventual effect on merchants, banks, payment apps and customers will depend on the final scope and implementation rules. NPCI has not announced whether the rate, threshold or eligible categories will change before the new date, and no official post-Diwali date was given in the announcement.
What merchants should watch
- NPCI’s separate notification naming the effective date.
- The final list of eligible P2M transaction categories and any exclusions.
- How acquiring banks and payment providers communicate the fee and settlement treatment.
- Whether the reported 0.4% rate and ₹2,000 threshold are retained.
RDI Fund names its first 19 managers
The Empowered Group of Secretaries approved the first cohort of Second Level Fund Managers (SLFMs) at its October 8, 2026 meeting. The cohort comprises 14 alternative investment funds (AIFs) and five focused research organisations (FROs), with an aggregate government commitment of ₹7,131 crore. The release describes this as a cohort-level commitment; it does not publish each manager’s allocation or state that the entire amount has already been disbursed.
A two-layer funding channel
The RDI scheme, launched in November 2025, has a government corpus of ₹1 lakh crore. Rather than awarding that entire sum directly to every startup, university or laboratory, the government routes capital through selected SLFMs. Those managers are expected to finance eligible technology enterprises undertaking research, development and innovation at Technology Readiness Level (TRL) 4 or above.
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Venture funds in the cohort
The named AIF managers include familiar Indian venture firms such as Chiratae Ventures, Blume Ventures, Kalaari Capital, Speciale Invest, YourNest, IvyCap, Ideaspring and TVS Capital. The official announcement identifies 14 AIFs in total; the names above are examples reported from the announced cohort, not a complete allocation table.
Focused research organisations
The five FROs are:
- AI & Robotics Technology Park (ARTPARK) at IISc Bengaluru
- Centre for Cellular and Molecular Platforms (C-CAMP)
- IIT Madras Research Park
- Pilani Innovation & Entrepreneurship Development Society (PIEDS) at BITS Pilani
- Society for Innovation & Entrepreneurship (SINE) at IIT Bombay
Including both investment funds and research-focused institutions allows the scheme to use different routes for technologies that are already moving toward deployment. TRL 4 generally indicates that a technology has reached laboratory validation, but the RDI release sets the eligibility floor and does not say that every supported project will be at the same maturity or receive the same type of financing.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How the two announcements differ
| Aspect | UPI MDR decision | RDI Fund cohort |
|---|---|---|
| Policy action | Implementation deferred until after Diwali | First manager cohort approved |
| Key date | Was due October 15, 2026; replacement date not yet notified | Cohort approved October 8, 2026 |
| Primary scope | Select P2M merchant transactions | Technology enterprises conducting RDI at TRL 4 or above |
| Money figure | Reported proposal: 0.4% on select eligible transactions above ₹2,000 | ₹7,131 crore aggregate first-cohort commitment within a ₹1 lakh crore scheme |
| Economic mechanism | Merchant-side payment-processing fee | Government capital routed through managers with expected equivalent private-capital mobilisation |
The announcements share a broad focus on technology infrastructure and economics, but they are separate policy actions. The UPI decision changes the timing of a payment-fee proposal, while the RDI announcement establishes a funding channel for technology development.
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What happens next
- NPCI must publish the post-Diwali UPI MDR date and final operating details.
- Payment providers and merchants will need to update settlement and reconciliation processes if eligible transactions become chargeable.
- The RDI Fund’s 19 managers will determine how capital is allocated among qualifying projects.
- Future RDI cohorts may expand the set of participating AIFs and research organisations.
- Actual deployment of the ₹7,131 crore commitment and the amount of matching private capital will become clearer through subsequent government and manager disclosures.
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