Those taking trades currently more than 3 lots or 75 Nifty at a time, life doesn't really change for them at all.
Those taking 1 lot or 25 of Nifty per trade putting up a margin of around Rs 20k, will be forced to minimum take a position of 75 Nifty by putting up Rs 60k as margin. The issue with increase in margin is that some people would not have enough money to trade nifty futures anymore, and those who have may not be comfortable taking much bigger risk on every trade.
Much bigger risk because now every point up and down could mean profit/loss of Rs 75 instead of Rs 25. All charges would go up proportionately as they are all % based. (if you are trading at Zerodha, since brokerage is flat 20, brokerage won't get effected).
Those traders who don't have money, might move to trading options. Trading options is much more riskier, and most retail don't really understand this product very well in terms of risk. If a trader was trading with 1 lot of Nifty using 25k, a 100 point move against him would have meant Rs 2500 loss. Buf if the trader bought an ATM or OTM option for the same 25k, and market moved against him the potential loss is the entire Rs 25,000.
Don't think the affect on Nifty F&O will be much, what will definitely take a hit will be stock futures where the liquidity is already quite low, and the increased contract value will substantially increase the margin required to trade a few of them. Also many retail traders participate in stock futures with 1 lot per trade currently.
Traditional brokers charge per lot fees for trading options. So an icicidirect currently would be charging Rs 100/lot or Rs 100 for every 25 nifty options bought. When the lot size goes upto 75, they will now be forced to charge only Rs 100. So the revenue yield for them for a 75 or 3 lot Nifty trade will drop from the current Rs 300 to Rs 100. 75% of the business is currently options, so traditional broking firms will definitely take a big hit in revenue.
Discount broking firms run on per trade fees, and the business composition is mainly retail traders. If because of the margin increase, number of trades drop, it will hit the revenue. For discount brokers 90%+ business comes from F&O, and this could mean a big hit for revenues in a surrounding where already most are struggling to stay profitable. Only the ones with scale, will probably continue to operate this model in the long run.
But yeah, like everything change is tough to deal with. We will all get used it in a while, but this one has the potential to change the dynamics of F&O business in India, for good and for bad.