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UPI’s Impact on Shaping India’s Foreign Policy


India’s United Payments Interface (UPI) has achieved a milestone by surpassing 10 billion transactions, showcasing its robust growth with a year-on-year increase of over 50%. This not only reflects domestic success but also underscores its significance in foreign policy, highlighting India’s digital strength. UPI had initially crossed the 1 billion monthly transaction mark in October 2019.


GS III: Indian Economy

Dimensions of the Article:

  1. How UPI Influences India’s Foreign Policy
  2. What is India Stack?

How UPI Influences India’s Foreign Policy

Leadership in the Global South

  • India seeks to establish leadership in the Global South through innovative digital governance.

Digital Public Infrastructure vs. Physical Infrastructure

  • India’s focus on Digital Public Infrastructure (DPI) distinguishes it from China’s emphasis on physical infrastructure development in developing nations.

Sharing India Stack with Partner Nations

  • Since June 2023, India has entered agreements with countries like Armenia, Sierra Leone, Suriname, Antigua & Barbuda, and Papua New Guinea to share its India Stack.

UPI’s International Expansion

  • UPI has expanded to global markets like France, UAE, Singapore, and Sri Lanka, with Japan, Mauritius, and Saudi Arabia expressing interest in adopting the payment system.

Global Digital Public Infrastructure Repository (GDPIR)

  • India intends to create the GDPIR, enabling the global sharing of DPI practices among G20 members and beyond.

Economic Diplomacy

  • UPI’s success attracts foreign investments and partnerships, bolstering India’s economic diplomacy endeavors and enhancing bilateral relationships.

What is India Stack?

Digital Infrastructure for India’s Challenges

  • India Stack is a collection of APIs (Application Programming Interfaces) designed to address India’s complex issues by facilitating presence-less, paperless, and cashless service delivery.

Government-Led Initiative

  • It’s a government-led initiative aimed at creating a robust digital infrastructure to enable various digital services across sectors.

Multi-Agency Ownership

  • Various agencies own and maintain different components of India Stack.

Enhancing Digital Services

  • India Stack aims to streamline and improve identity verification, data exchange, and digital payment processes, making them more accessible and efficient for citizens.

Digital Public Goods

  • It includes digital public goods, offering digital resources and tools to support diverse digital services and initiatives.
Three Key Layers

Identity Layer (Aadhaar)

  • Aadhaar, issued by the Unique Identification Authority of India (UIDAI), is at the core of India Stack, providing digital identity solutions.
  • It’s a proof of residence, not citizenship, and doesn’t grant domicile rights.

Payments Layer (UPI)

  • UPI ensures interoperability among payment custodians, payment rails, and front-end payment applications.
  • Managed by the National Payments Corporation of India (NPCI), UPI is licensed to third-party entities like PhonePe, Google Pay, and Paytm.

Data Governance Layer

  • Digital Locker, based on Data Empowerment and Protection Architecture (DEPA), incorporates a consent management system for secure information sharing in financial, health, and telecom services.
Versatile Application
  • India Stack’s vision extends beyond India; it can be applied globally, whether in developed or emerging nations.

-Source: Indian Express

June 2024