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Indian IT Sector’s Fiscal 2026 Outlook Dimmed by Weak US Demand and Trade Tensions

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India’s information technology (IT) sector, one of the worst-performing industries this year, is unlikely to see a strong recovery in fiscal 2026, according to analysts. The outlook remains uncertain, following recent warnings from Accenture, the world’s largest IT services firm, which cited weak discretionary spending and lackluster demand from its clients.

Accenture’s quarterly report flagged that client budgets remained flat, with little growth in discretionary project spending. The company also noted that global trade tensions, exacerbated by new U.S. tariffs, have further dampened prospects in the United States, a key market for Indian IT firms.

Amit Chandra from HDFC Securities noted that the last few months have heightened uncertainty about the first half of fiscal 2026 and how this will affect the overall recovery rate for the year. As of now, India’s IT index has dropped 15.3%, marking its worst performance since June 2022. Major firms such as TCS, Wipro, Infosys, and HCLTech have seen losses ranging from 11.2% to 18.1% this year.

Analysts from Kotak Institutional Equities warned that a soft recovery in demand and fewer mega deals in fiscal 2025 will result in slower revenue growth in fiscal 2026 for Indian IT companies. The impact of early-stage adoption of generative AI is also expected to present challenges, they added.

Research from Citi and Morgan Stanley forecast modest growth, with Citi estimating 4% revenue growth for IT companies in fiscal 2026, similar to fiscal 2025, and Morgan Stanley highlighting subdued client spending as a key factor limiting growth. However, sectors like banking, financial services, insurance (BFSI), and healthcare have shown some signs of recovery, although many clients are currently in a “wait-and-watch mode,” potentially leading to further reductions in spending.

Accenture’s report also indicated that U.S. clients have delayed or canceled new contracts, partly due to the Trump administration’s policies, which could increase competitive pressures in other segments, despite Indian IT companies having limited exposure to these delays.

Meta to Require AI Disclosure for Political Ads Ahead of Canadian Elections

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Meta Platforms (META.O) announced on Thursday that it will require advertisers to disclose the use of AI or other digital techniques in political or social issue ads ahead of Canada’s federal elections. This move aims to combat misinformation and increase transparency in the political advertising landscape.

The new disclosure rule will apply to ads featuring photorealistic images, videos, or realistic-sounding audio that have been digitally altered to show a real person saying or doing something they did not actually say or do. It will also apply to ads showcasing non-existent individuals or fabricated events, altered footage of real events, or misleading depictions of events that may not be accurate.

In November 2023, Meta extended its ban on new political ads following the U.S. election to combat misinformation. The company also prohibited political campaigns and advertisers in regulated sectors from using its generative AI advertising tools. Despite these efforts, Meta had a setback earlier this year when it scrapped its U.S. fact-checking programs amid pressure from conservatives to overhaul its approach to political content.

Additionally, Meta has introduced a feature allowing users to disclose when they share AI-generated content, enabling the platform to label such media accordingly.

Brave Software Sues News Corp Over Copyright Dispute

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In a significant legal battle, Brave Software has filed a lawsuit against News Corp in response to a cease-and-desist letter sent by the media conglomerate. The letter warned Brave that it faced potential litigation for allegedly “scraping” copyrighted content from News Corp’s websites, including those of The Wall Street Journal and New York Post. The suit was filed on Wednesday night in San Francisco federal court.

Brave, the company behind the Brave Search engine, argues that its actions are covered under the “fair use” doctrine, asserting that indexing website content is a necessary practice for search engines to operate. The company also contends that News Corp’s actions could undermine advancements in generative AI, claiming that chatbots such as ChatGPT and Google’s Gemini rely on search engine responses, which could be impacted by this dispute.

According to Brave, its market share is a fraction of the search industry, with its search engine holding less than 1% of the market, while Google dominates with nearly 90%, followed by Microsoft’s Bing. Brave accuses News Corp and its partners of attempting to “bully” the company and further cementing the already high barriers to entry in the search engine market.

In a public statement, Robert Thomson, CEO of News Corp, rejected Brave’s claims, labeling the company’s actions as “piratical, parasitical practices” disguised as traditional search. He emphasized that the unauthorized use and sale of News Corp’s copyrighted content to AI engines and other clients is not fair use, but a blatant violation of intellectual property rights.

This legal battle adds to the growing tensions between publishers and tech companies over the use of copyrighted content in support of AI technologies. News Corp has previously filed lawsuits against other companies, including Perplexity AI, for alleged unauthorized copying of its articles.

In its lawsuit, Brave is seeking a declaration from the court that its use of copyrighted News Corp content for search indexing purposes is not a form of infringement. The case highlights the broader conflict between content creators, who argue for protection of their intellectual property, and technology companies, which push for more access to such content to power AI developments.