"Cross-border interlinking of Fast Payment Systems is emerging as a soft-power instrument of India's foreign policy." Discuss with reference to UPI internationalisation.

Soft power works through attraction rather than coercion. India's Unified Payments Interface (UPI), operated by NPCI, has become such an instrument: by interlinking with partner countries' domestic fast payment rails — most recently Nepal's National Payments Interface on 6 June 2026 [1] — India exports a public digital good rather than projecting hard power.

How interlinking generates soft power

• Digital Public Infrastructure (DPI) diplomacy: India has signed DPI cooperation MoUs/agreements with 23 countries, sharing digital identity, payments and data-exchange stacks [2]. Attraction flows from a replicable, low-cost model, not conditional lending.
• Neighbourhood First: The UPI–NPI linkage, built by NIPL with Nepal Clearing House Limited, enables real-time P2P transfers using mobile numbers or UPI IDs [1], deepening goodwill among Nepali migrants and pilgrims.
• Global footprint: UPI is live across eight countries — UAE, Singapore, Bhutan, Nepal, Sri Lanka, France, Mauritius, Qatar [3] — converting technological credibility into diplomatic capital.

Material gains reinforcing influence

• Cheaper, formal remittances: Earlier flows relied on the RBI's NEFT-based Indo-Nepal Remittance Facility (2008), capped at ₹2 lakh per transaction for account holders and 12 remittances a year for walk-in users [4]. Instant rails cut cost and displace informal hundi channels.
• Interoperability with sovereignty: Linking two domestic rails via APIs avoids dependence on foreign card networks, an argument that appeals strongly to the Global South.

Limits to the claim

• Coverage remains bilateral and largely P2P; scale is modest against established correspondent-banking and card systems.
• Success depends on partner regulators, FEMA and forex-cap harmonisation, and currency-convertibility constraints.
• Soft power accrues only if service quality, grievance redress and cyber-resilience hold.

UPI internationalisation therefore functions less as a payments upgrade and more as an instrument of trust-building — attraction earned through demonstrated public value. Sustaining it requires standardised multilateral interlinking, data-protection safeguards, and capacity-building support for partner nations, so that India's DPI diplomacy advances both regional integration and the SDG goal of cheaper remittances.