After France and UAE, Indonesia plans UPI deal with India
India's flagship instant payment system, Unified Payments Interface (UPI), will likely be used in Indonesia as the two countries are looking for a deal for bilateral trade in domestic currency, real-time card recognition, and digital payments, The Times of India reported. This will further expand UPI's market horizons and reduce dependency on forex cards and cash.
Why does this story matter?
Bhutan, Nepal, and the United Arab Emirates (UAE) have already adopted UPI. In 2022, the National Payments Corporation Of India (NPCI), UPI's developer, signed an agreement with France's secure online payment system, Lyra. Talks are also ongoing to expand UPI to Europe, West Asia, and the United States (US). Earlier this week, India and the UAE signed agreements on trade settlement in national currencies.
Nirmala Sitharaman discusses currency, UPI deal with Indonesian counterpart
According to reports, steps to strengthen India-Indonesia trade and investment relations were discussed at Finance Minister Nirmala Sitharaman's meeting with her Indonesian counterpart, Sri Mulyani Indrawatias, at the start of the "Economic and Financial Dialogue." On the occasion, Mulyani reportedly stated that the two countries would explore possibilities of cooperating in digital technology, local payment systems, and the use of more local currency.
India-Indonesia cooperation includes bilateral investment, financial services: Sitharaman
After her meeting with Mulyani, Sitharaman said, "The areas of cooperation include bilateral investment, financial services, and infrastructure development, among others." She noted that India has established expertise in digital public infrastructure, which can be shared with Indonesia to provide time-tested solutions. Sitharaman stated that the collaboration will assist Indonesia in attaining its financial inclusion goals by providing an affordable digital payment system.
Deal with Indonesia similar to one with UAE: Report
Meanwhile, an Indian official said that the arrangement of using local currencies in trade will be similar to the one with the UAE. He claimed the decision could see Indian exporters settle their trade in Indonesian rupiah, while those exporting, say, palm oil, can earn in Indian rupees. Notably, Indonesia is India's largest trading partner in the Association of Southeast Asian Nations (ASEAN) region.
Indonesia is India's major trading partner
Indonesia was India's sixth-largest trading partner and enjoyed a trade surplus of $19 billion when bilateral trade was around $39 billion last year. India reportedly sees the new proposed partnership as a significant development owing to many trade interests. Now, India can share digital public infrastructure with Indonesia after Singapore, the UAE, and France, with each country "taking a brick from the India stack."
