Examine India's approach to cross-border payments through UPI and local-currency settlement.

Faced with a dollar-centric payments order, India has avoided building a rival messaging network and instead pursued a two-track approach — interlinking its Unified Payments Interface (UPI) with foreign fast-payment systems, and settling trade bilaterally in national currencies.

Track 1: UPI-led retail interlinkage

• UPI–PayNow (Singapore), operational since February 2023, allows instant, low-cost remittances without onboarding onto the other system [1].
• The RBI–Central Bank of the UAE MoUs (2023) extend this to linking UPI with the UAE's Instant Payment Platform and RuPay with UAESWITCH [2].
• Project Nexus, under the BIS Innovation Hub, moves from bilateral links to a multilateral blueprint; India joined Indonesia, Malaysia, the Philippines, Singapore and Thailand in incorporating Nexus Global Payments (2025) [3].
• Gain: cheaper remittances, digital-public-infrastructure diplomacy, and no exposure to another state's control.

Track 2: Local-currency settlement

• The Special Rupee Vostro Account (SRVA) route lets partner banks hold rupee balances that are freely repatriable and investable in T-Bills and G-Secs without an FPI licence [4].
• The Local Currency Settlement System (LCSS) for INR–AED covers current and permitted capital account transactions, cutting cost and settlement time [2].
• Multilaterally, the BRICS New Delhi Declaration (2026) endorses greater trade and payments in national currencies [5].

Critical assessment

• Uptake is thin: rupee settlement remains a small share of India's trade, as adverse trade balances leave partners holding idle rupees they cannot easily spend.
• The constraint is currency demand, not plumbing — the renminbi, despite CIPS, is only about 2% of cross-border transactions [6], while the dollar dominates trade finance [7].
• Frequent revisions to SRVA norms created regulatory uncertainty for banks.

India's approach is thus pragmatic rather than confrontational: it builds optionality without inviting sanctions risk. Deepening rupee-asset markets, easing investment caps on vostro balances and scaling Nexus would convert these pilots into genuine internationalisation — advancing the G20's cheaper, faster cross-border payments agenda.