How UPI becomes an instrument of India’s digital infrastructure diplomacy

UPI, India's digital payments system, has evolved from a domestic solution to a key component of the country's digital diplomacy strategy. Despite facing three significant constraints—fragmented banking institutions, a neutral interface, and prohibitive transaction fees for users—the system was designed to be scalable and exportable.

The adoption of UPI by 24 countries across five regions has enabled India to establish a network of digital infrastructure agreements, helping these nations build population-scale digital solutions. This export playbook, comprising three levels of transfer—connecting, building, and sharing—allows countries with existing systems to connect via a shared link, nations with no systems to build their own payment infrastructure, and those with an operational network to share the governing protocol while retaining no proprietary interest.

This unique approach to digital infrastructure offers a third way between costly foreign platforms and building systems from scratch, marking a significant departure from traditional diplomatic leverage based on market size or exclusionary rules. UPI's success in facilitating cross-border transactions also underscores its significance, with India accounting for nearly half of all global real-time payment transactions.