What is changing
As it negotiates free-trade pacts, New Delhi is seeking to link its domestic payment infrastructure to partner countries' systems, aiming to reduce the expense and hassle of cross-border transfers. Recent deals with the European Union and New Zealand included provisions to strengthen those payment connections, signaling this is becoming a standard feature of India's trade playbook.
Who said what
Commerce Secretary Rajesh Agrawal said on Wednesday at Global Fintech Fest in Mumbai, "Every free trade agreement we negotiate, there is also a discussion around how we can align our payment systems and harmonize our payment system to talk to each other, especially in countries where India has a huge diaspora." The public remarks underscore how routinely payment interoperability now features in India's trade agenda.
On Tuesday, Prime Minister Narendra Modi outlined a plan for India to connect the Unified Payments Interface - its real-time digital payments network - to nations with sizable Indian expatriate populations. UPI, which handles more transactions than any other real-time payments system globally, is already available in 11 countries, and India is looking to bring it to additional markets.
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Why it matters for your money
The Indian diaspora is sizable at roughly 35 million people, and in the fiscal year ended March they collectively transferred more than $155 billion back to India. Those inflows bolster foreign currency supplies, and during market stress, special deposit schemes from overseas Indians have helped support the country's foreign-exchange reserves. If India succeeds in stitching UPI into more national systems, everyday cross-border payments could get simpler and cheaper for families and small businesses alike.
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