Cross-border interlinking of Fast Payment Systems is emerging as a soft-power instrument of India's foreign policy.

Q. Cross-border interlinking of Fast Payment Systems is emerging as a soft-power instrument of India's foreign policy. (15 marks, 250 words)

Soft power is the ability to shape outcomes through attraction rather than coercion. India's export of its Digital Public Infrastructure (DPI) — notably interlinking the Unified Payments Interface (UPI) with partner Fast Payment Systems — has become a distinctive vehicle of such influence, epitomised by the bidirectional UPI–NPI remittance corridor with Nepal operationalised in June 2026 [1].

How FPS interlinking projects soft power - DPI diplomacy: India has signed DPI cooperation MoUs with 23 countries, offering a low-cost, open-source alternative to proprietary card networks [4]. - Neighbourhood First: UPI is now live across 8 countries, embedding India in the region's payments plumbing and countering rival fintech footprints [6]. - Economic goodwill: cheaper rails displace informal hundi channels, cutting remittance costs for migrant workers — building on the 2008 Indo-Nepal Remittance Facility [3]. - Scalable model: NIPL's Cambodia KHQR linkage shows the template travels beyond South Asia [2].

Limits to the soft-power claim - Reciprocity and sovereignty: partners may resist deep integration fearing data or monetary dependence; benefits skew toward Indian outflows. - Regulatory friction: harmonising FEMA norms, forex caps and settlement rules slows rollouts; merchant QR acceptance preceded true P2P linkage [5]. - Nascency: eight corridors are modest; durable influence needs volume and trust.

Fast Payment System interlinking is genuine soft power — attraction through utility, not aid. Anchored in openness and financial inclusion, and paired with equitable governance, it can consolidate India as a trusted DPI partner advancing SDG-aligned digital cooperation.

(~250 words)

Sources: 1. India and Nepal Launch Cross-Border Remittance Mechanism, PIB (11 June 2026) — UPI–NPI bidirectional P2P corridor operationalised June 2026 2. NPCI International and ACLEDA Bank Launch Cross-Border UPI in Cambodia via KHQR, PIB — scalable NIPL model beyond South Asia 3. Indo-Nepal Remittance Facility Scheme FAQs, RBI — 2008 predecessor and migrant-remittance objective 4. India signs DPI cooperation MoUs with 23 countries, PIB — DPI diplomacy and UPI live in 8 countries 5. Department of Posts and NPCI International Payments Limited Sign Agreement, PIB — NIPL role; QR acceptance preceding P2P linkage 6. From Queues to QR Codes: India's Payment Revolution, PIB — UPI internationalisation footprint