Can export of digital infrastructure buy India strategic influence?

Major gains from digital infrastructure diplomacy

There are three main returns of digital infrastructure diplomacy, i.e., remittances, trade, and strategic gains. 

Remittances

The most immediate concern is remittances. India receives more remittances than any other country. According to data compiled by the Reserve Bank of India (RBI), India received an estimated USD 129 billion in 2024 and a record USD 135.46 billion in the last financial year from some 18.5 million Indians abroad.

Cheaper remittance transfers reach millions of households, and India could have secured that benefit by linking its system to a handful of large diaspora corridors. Instead, India pursued it as an instrument of strategic significance.  

Trade

An even larger return lies in trade. When partner countries bring their systems into Project Nexus, it standardises how national payment systems connect to one another. As a multilateral platform that enables instant cross-border retail payments by interlinking domestic Fast Payments Systems (FPSs), Project Nexus replaces a separate arrangement with every new partner with a single link.

Each country on the network becomes a low-friction channel for trade. This opportunity is visible in ASEAN, home to four of the five founding members of Project Nexus and a region with approximately USD 128 billion in Indian commerce annually. 

Here, the arithmetic favours diplomacy: in a shared platform like Project Nexus, the return grows with every new state that joins it. However, cross-border volumes are still small, and on the ground acceptance is sparse.

Strategic gains

The third return is strategically enduring: a compounding advantage for India because its designs and templates form the basis for each new system being built by other countries. Standards like dollar clearing still route payments between parties with no American involvement in the underlying transaction. This is why command over such digital architecture becomes an instrument of strategic power in the long run. 

Through the G20, the shared DPI repository and Project Nexus’s common technical standard, India is moving from being a user of digital systems to becoming a public digital infrastructure norm setter, a leverage that could endure for decades. 

The export of these systems also creates long term technology partnerships and market presence, with commercial upside for the Indian industry. Follow-on business for Indian fintech firms, system integrators and technology expertise becomes a real opportunity.

India as the Global South’s reference model

India shares its architecture with 24 partner countries at no charge, leaving ownership with the states that build it. This positions India as the Global South’s reference model, different from the American approach of private platforms, fees and data, and from the Chinese model exported with hardware and state control. 

For developing economies, it is an exit from dependence on a handful of foreign private firms, the opposite of technologies that usually lock countries into private sector dependence.  Here, any partner country running its own digital infrastructure holds the code, the operations and the data, so nothing exists for India to switch off, revoke or reprice.

If assessed specifically as an instrument of foreign policy, this digital infrastructure diplomacy possesses three properties that distinguish it from the rest of India’s repertoire. Compared with credit lines that consume fiscal space, it is inexpensive. Once the standard exists, each additional adoption costs almost nothing. 

Can digital infrastructure turns goodwill into influence?

Digital infrastructure diplomacy also engages a different order of officials. Development finance is negotiated with finance ministries, while digital infrastructure draws in central banks, payment regulators and identity authorities – permanent bureaucracies whose officials outlast the governments that appoint them. 

And it travels where India’s other foreign policy instruments have not. Development cooperation is largely concentrated in the neighbourhood and Africa, while digital partnerships have reached as far as Peru and Trinidad and Tobago, countries with which India’s ties are comparatively thin.

Here lies the paradox at the heart of this undertaking. Diplomacy has traditionally been an art of withholding: aid can be suspended, markets closed and guarantees revoked. India has fashioned an instrument that withholds nothing. Namibia’s instant payment platform went live in June 2026, and it owes New Delhi neither fee nor permission nor deference.

Whether this goodwill hardens into a durable influence, or whether influence ultimately requires a partner country to have something it fears to lose, is the wager India has made. The early evidence favours it. Despite not being obliged to New Delhi contractually,  these partner states continue to build to Indian specifications. A standard adopted freely may be harder to abandon than one accepted under duress. Untested as that remains, the nearer problems have already presented themselves.

State-built system and private providers

The first concerns whether public ownership, the very feature that makes this model adoptable, can be defended against the interests it displaces. On 15 July 2026, the US Trade Representative concluded its Section 301 investigation into Brazil and a tariff of 25 per cent was imposed on certain Brazilian goods.

One of the grounds for the tariff imposition was Brazil’s treatment of its public instant-payment system, Pix. The Brazilian central bank’s dual role as regulator and owner/operator of Pix creates a conflict of interest and disadvantages US payment providers.

However, India’s position is institutionally stronger. The National Payments Corporation of India (NPCI), which launched UPI in 2006, is a not-for-profit utility owned by the banks that use it. The NPI operates under the RBI’s supervision, while remaining separate from it.

The position nevertheless has limits. NPCI requires participation by large banks and UPI is free at the point of use – both features were cited against Pix. That argument is likely to be made in trade forums as well as development ones, and there the question will be whether a state-built system competes with private providers or forecloses them.

Exporting infrastructure without institution 

The second question follows from the ownership India insists upon. A system belongs to the state that operates it, so its safety and inclusiveness ultimately rest on that state’s regulatory capacity. Tech Policy Press has put a harder version of the same point: a country adopting one of these platforms also adopts the assumptions built into it about how transactions are recorded and what the state may see of them. 

Capacity building accordingly forms part of the offer. The Trinidad agreement provides sustained skills transfer alongside the platform, while the Social Impact Fund attaches technical assistance to implementations in developing countries. The task ahead is to make such provisions uniform, so partners arrive equipped to make those choices for themselves.

Data governance and cybersecurity

Data governance presents a third question. India requires payment data generated at home to reside on Indian servers, with any copy processed abroad deleted within a day. Partner countries increasingly maintain localisation rules of their own. A transaction crossing three jurisdictions may therefore encounter three sets of requirements. No country has resolved this, and the answer is being built multilaterally. 

Regulatory supervision raises a fourth question. When national payment systems are interlinked, it leaves unclear which authority governs a disputed transaction. For now, Project Nexus participants have addressed this through the scheme organisation established in Singapore to govern the arrangement once live. 

Cybersecurity and systemic risk present a fifth concern. Payment and identity rails operating at population scale are always high-value targets. A breach or outage in an exported system would carry risk for India.

Can infrastructure become diplomatic leverage?

The final question is whether these partnerships translate into support in the rooms where India wants it: at the United Nations, in trade negotiations and within the bodies that write technical standards. None is old enough to have been tested. Beyond all, the export of the architecture has moved faster than the rules governing it. 

India is installing systems in countries whose data protection frameworks are thinner than its own, even as its domestic frameworks remain incomplete. Completing that framework and writing comparable safeguards into each agreement abroad would close the gap between what India exports and what it has finished regulating.

Post read questions

1. India’s export of UPI and digital public infrastructure represents a shift from traditional development assistance to infrastructure-led diplomacy. Discuss.

2. India’s UPI diplomacy presents a model of technology cooperation distinct from both Western private-sector-led platforms and China’s state-backed technology exports. Examine.

3. How can India leverage UPI and other Digital Public Infrastructure to strengthen its engagement with the Global South? Discuss the opportunities and limitations.

4. The real test of India’s digital diplomacy is not how many countries adopt UPI, but whether adoption translates into durable strategic influence. Discuss.

(Shamna Thacham Poyil holds a Doctorate in Political Science from University of Delhi.)   

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