India's Digital Public Infrastructure has emerged as a tool of economic diplomacy.

Q. India's Digital Public Infrastructure has emerged as a tool of economic diplomacy. (15 marks, 250 words)

Digital Public Infrastructure (DPI) — the population-scale, interoperable "India Stack" of Aadhaar, UPI and data-exchange layers — has moved beyond domestic governance to become an instrument of India's foreign economic engagement, exporting rails rather than aid.

How DPI advances economic diplomacy - Payments export as soft power: UPI merchant acceptance is now live in UAE, Singapore, Mauritius, Nepal, Bhutan, Sri Lanka, France and Qatar, with Cambodia added via NPCI International–ACLEDA Bank linkage on KHQR [1][2]. - Bilateral rail-linkages: The UPI–PayNow tie-up with Singapore (2023) enables real-time, low-cost remittances, cutting dependence on card networks [4]. - Neighbourhood and Act East outreach: Cambodia's onboarding deepens Mekong–Ganga/ASEAN ties and offers a credible alternative to Chinese wallets [1]. - Global standard-setter: IMF recognition of UPI as the world's largest real-time system (~49% of global volume) lends India normative weight in G20 cross-border-payment reform [3]. - Ecosystem diplomacy: Beyond payments, MoUs on DigiLocker, ONDC and CoWIN position DPI as an open-source public good for the Global South [2].

Limits to be managed - Rollouts are often one-way (Phase-1) merchant acceptance; full two-way settlement and FX mechanics remain pending [1]. - Data-sovereignty, cyber-security and regulatory-harmonisation concerns can slow adoption abroad.

Thus DPI has genuinely become a differentiated, low-cost diplomatic asset, projecting India as a trusted technology partner. Sustaining it demands robust data-protection safeguards, interoperable standards and completion of two-way corridors—advancing both India's trade interests and the SDG-8/9 goal of inclusive digital growth.

(~250 words)

Sources: 1. NPCI International and ACLEDA Bank Launch Cross-Border UPI Payments in Cambodia via KHQR (PIB, 3 Jun 2026) — Cambodia go-live, Act East/ASEAN link, Phase-1 one-way scope 2. UPI is now live in over eight countries (PIB) — countries with UPI acceptance; DPI MoUs/India Stack export 3. UPI Recognized as World's Largest Real-Time Payment System by IMF (PIB) — ~49% global real-time share 4. UPI–PayNow Linkage FAQs (RBI) — India's first real-time cross-border linkage, low-cost remittances