How UPI Can Become India’s Next Soft-Power Export

by Pitamber Kaushik - 24 February, 2026, 12:00 39 Views 0 Comment

When political scientist Joseph Nye defined “soft power” as the ability to shape outcomes through attraction rather than coercion or upfront reward, he was describing a form of influence that works best when it feels voluntary, convenient, and even natural. Soft power has long been associated with media, entertainment, culture, language, and education. For India, cinema, spirituality, and yoga have been its leading cultural exports over the decades. However, in the 21st century, the most potent “attraction” is embedded in the invisible rails that make daily life easier, such as identity, payments, and data exchange. A country that designs these rails well can become the default reference point for how modern governance and markets should function.

This is where India’s Unified Payments Interface (UPI) enters the soft-power conversation. UPI’s global significance is not merely that it is “big.” It is that it represents a coherent philosophy of digital public infrastructure: interoperability by design, low friction for users, and an ecosystem approach that allows private innovation on top of public rails. This results in a network that millions experience as trustworthy and effortless. This is precisely the kind of repeated, positive contact that turns a technical system into a reputational asset. UPI has the potential to become the most influential and persistent instrument of Indian soft power by serving as a vital piece of infrastructure of ubiquitous daily utility.

UPI’s scale creates credibility, the currency of influence

Soft power requires a story others find believable. UPI’s story is believable because it is anchored in scale and demonstrated state capacity. The Indian government has reported that UPI transactions grew from 92 crore in FY 2017-18 to 13,116 crore in FY 2023-24 at a metoeric CAGR of 46%, and continued at massive volumes in FY 2024-25. Whatever one’s view on policy, a system that can operate at this intensity with near-instant user experience becomes a proof-of-competence artifact. Other governments, central banks, and regulators pay attention because the “can this even work?” question has already been answered in production at a national scale.

International institutions have also added to this credibility. An International Monetary Fund fintech note in June 2025 framed interoperability as a driver of adoption and used systems like UPI to illustrate the point. UPI has been recognised as the world’s largest retail fast-payment system by transaction volume. Based on an external industry report, UPI accounts for roughly half of global real-time payment transactions. Even when one treats any headline statistic cautiously, the broader signal is unmistakable: UPI has moved from a domestic convenience to an internationally legible benchmark.

Exporting the model framework, not the instance

A common misconception is that exporting UPI means exporting an Indian app. In reality, UPI’s soft-power potential lies in exporting a governance-and-technology pattern: shared rails, many competing interfaces, and default interoperability. This is precisely why UPI has been discussed in policy circles as part of “digital public infrastructure.” The Bank for International Settlements has published an analysis of UPI as a case study in how interoperable payment design can broaden access while preserving systemwide stability and consumer protection.

This matters for soft power because models travel better than products. A model offers other countries something they can adapt without feeling captured by a foreign vendor. If India is seen as the champion of an open, modular approach framed by public rails and private innovation, then India becomes associated with a form of technological sovereignty that many governments want, i.e., modern payments without handing strategic control to a single corporate gatekeeper.

Cross-border UPI turns everyday convenience into diplomacy

Soft power is strongest when it shows up in ordinary life. Cross-border payments are one of the cleanest ways for that to happen. When a traveller pays a taxi driver, buys medicine, or settles a restaurant bill using familiar rails abroad, a piece of the home system becomes part of the host country’s lived experience. Instead of relying on slippery propaganda, it builds on the firm foundation of practical affinity.

UPI’s international footprint is expanding through partnerships and interoperability arrangements led by NPCI International Payments Limited, the global arm associated with National Payments Corporation of India. A clear example is the UPI-PayNow linkage between Singapore and India, announced by the Monetary Authority of Singapore as enabling instant, low-cost transfers between bank accounts across the two systems. The Reserve Bank of India has also documented operating parameters of this corridor (such as limits and permitted remittance purposes), which signals that this is not merely a fintech experiment but a regulator-to-regulator construct.

Similarly, new corridors are forming. In February 2026, reporting described a partnership to integrate UPI with Malaysia’s DuitNow for QR-based merchant payments, reflecting the same playbook of interoperability, phased rollout, and traveller-centric use cases. Each such corridor is a small diplomatic channel erected on the substrate of trust, compliance alignment, operational cooperation, and a shared commitment to furnish a seamless user experience.

Standard-setting power manifests with the framework becoming the reference architecture

There is a quiet hierarchy in global finance wherein systems that set defaults shape everyone else’s options. For decades, that standard-setting role largely sat with card networks, messaging systems, and private rulebooks. UPI’s soft-power opportunity is to make “interoperable instant payments” the new normal and to do so with principles that many countries find attractive: competition at the app layer, common rails underneath, and cost structures that make small transactions viable.

This is why UPI’s rise is a governance story more than a payments story. If policymakers in other countries conclude that the “Indian approach” is the most realistic path to rapid digitisation without monopoly dependence, India gains something that runs much deeper than market share — it gains agenda-setting capacity. The questions then become: How should instant payments be regulated? What should interoperability require? What identity and consent models best prevent fraud while preserving access? Which dispute-resolution standards are fair? The country whose lived system best answers these questions tends to become the reference point in international forums and bilateral negotiations.

Soft power through the diaspora, remittances, and small merchants

A distinctive advantage for India is the scale and geography of the Indian diaspora. Remittances and family transfers are not niche flows; they are recurring social obligations. When UPI-linked corridors make those transfers cheaper, faster, and easier, the system becomes emotionally embedded, being associated with care, responsibility, and reliability. That emotional association is a powerful soft-power engine because it is transmitted person-to-person rather than broadcast top-down.

The same is true of micro and small merchants. Real-time QR-based payments lower barriers to formal participation. Replicating that pattern internationally, through bilateral rails or acceptance arrangements, will gain India’s “small merchant inclusion” narrative a strong global resonance. Thus, in effect, UPI can become a symbol of a promising development pathway: modern finance that does not require expensive point-of-sale hardware, complex onboarding, or high per-transaction fees.

The geopolitical edge lies in offering an alternative without forcing alignment

Soft power works best when it does not feel like a demand to “choose sides.” UPI’s internationalization can be framed as an option: a set of rails that countries can integrate with while keeping their own sovereignty, rather than a closed ecosystem that locks them in. That “non-coercive alternative” is especially valuable in a world where many governments want to diversify dependencies in critical infrastructure, including payments.

At the same time, payments are never purely technical. Cross-border systems trigger concerns about data access, compliance, sanctions, and anti-money laundering standards. A Reuters report noted India’s interest in pushing for more technology-neutral global compliance approaches that would not disproportionately burden new rails compared to legacy systems, highlighting that global rule-making can shape UPI’s ability to scale abroad. This is exactly where soft power becomes concrete: credibility and relationships determine whether other actors treat India as a rule-shaper or merely a rule-taker.

What India must get right for UPI to function as soft power

Soft power is fragile; it can be earned through convenience and lost through distrust. If UPI is to become a durable instrument of Indian influence, four things matter.

First, reliability and security must remain non-negotiable. International adoption magnifies reputational risk: a major outage, fraud wave, or poor grievance redressal can travel across borders faster than a marketing campaign ever could.

Second, India must keep the “interoperability ethos” intact. The moment UPI is perceived as an instrument for capturing data or imposing proprietary control, it stops being attractive. Soft power requires others to feel they retain agency.

Third, cross-border expansion must be paired with credible governance: transparent standards, clear liability frameworks, and regulator-to-regulator trust. The existence of formal parameters and FAQs from central banks is not bureaucratic trivia, but an essential part of what makes integration politically feasible.

Finally, India should treat UPI as part of a broader “stack diplomacy.” Payments alone are powerful, but payments combined with identity, consent-based data sharing, and pro-innovation regulation form a full narrative of capable, inclusive digital statecraft, one that other countries can adapt.

The diplomacy of frictionless trust

UPI’s soft-power potential arises from the simple dynamic of repeated positive experiences scaling into reputational capital. When millions experience a system as fast, fair, and dependable, they begin to associate its originating country with competence and pragmatism. When other governments see a model that delivers inclusion without sacrificing competition, they begin to treat that country as a credible partner in setting the next generation of global norms.

In that sense, UPI can far exceed its identity as a payment system. It has a very realistic prospect of becoming a signature of modern India, a country whose influence is carried beyond speeches and summits, through the quiet confidence of infrastructure that works every day, for everyone, at scale.

References

Pitamber Kaushik
Author is a journalist, columnist, writer, strategy consultant, and independent researcher currently based out of Mumbai, India. His writings have appeared in over 400 publications across 80+ nations. He has previously written for Asia Times, Brussels Times, New Humanist, International Policy Digest, Austrian Economics Centre, The Hindu, Euroscientist, TerraGreen, Science Reporter, and Mongabay, among numerous other publications.

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How UPI Can Become India’s Next Soft-Power Export

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