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G7 states adopt cautious approach to India’s push for digital public infra

By, Rajeev Jayaswal
Apr 13, 2023 12:56 AM IST

Developing countries have shown greater interest in embracing India’s DPI, which the government has aggressively showcased at G20 meetings.

New Delhi: India has used its G20 presidency to push an array of digital public infrastructure (DPI), ranging from Unified Payments Interface (UPI) to the Aadhaar identification system, though the response from G7 states has been less than enthusiastic, people familiar with the matter said on Wednesday.

The proliferation of efficient and cost-effective payment technologies such as UPI has been tacitly opposed by established multinational players. (FILE)
The proliferation of efficient and cost-effective payment technologies such as UPI has been tacitly opposed by established multinational players. (FILE)

Developing countries have shown greater interest in embracing India’s DPI, which the government has aggressively showcased at G20 meetings such as the recent gathering of sherpas at Kumarakom in Kerala. Several side events plugged products for addressing crucial issues such as digital identity, financial inclusion and equitable access to education and health.

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The real-time linking of UPI with Singapore’s PayNow in February was seen as a major win for India’s DPI, and National Payments Corporation of India (NPCI) CEO Dilip Asbe told reporters at Kumarakom the government is in talks with several countries, including some in the neighbourhood, to forge more such links.

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However, people engaged in negotiations within the G20 framework said developed countries had been less willing to sign on for India’s DPI for a variety of reasons, ranging from pushback from global payment processors such as Visa and Mastercard and knotty issues pertaining to governance.

“It’s very clear developing countries are more enthusiastic about India’s digital products because they feel these can drive financial inclusion and economic activity, especially in countries where many people don’t have bank accounts or even identity documents,” one of the people cited above said on condition of anonymity.

Some G7 member states have adopted a cautious approach to DPI since they believe these digital products have implications for internet and data governance and will involve tricky matters related to legislation and regulation, the people said.

The proliferation of efficient and cost-effective payment technologies such as UPI has been tacitly opposed by established multinational players that enjoy a dominant position in processing global payments, the people said. “International lobbies will try to push the agenda of large MNCs but the digital divide must be bridged and India is committed to this,” a second person said.

Asbe too acknowledged India’s DPI will be “more attractive” to developing and underdeveloped economies, since governments and regulators in most developed nations were traditionally not involved in setting up digital infrastructure such as payment systems and work in this field was driven by the profit motive.

“The Indian government and regulator are trying to see how this G20 presidency can be leveraged to sign some MOUs and agreements with some countries at least before the end of this calendar year,” Asbe said, declining to name the countries with which the Indian side is engaged in negotiations.

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The second person cited above said a key item on India’s G20 agenda is bridging the global digital divide. “This is the reason why the G20 Task Force on Digital Public Infrastructure for Economic Transformation, Financial Inclusion and Development has been set up. India is in a position to share technology and experience with developing and small countries so that their citizens can access services in finance, health, education, e-governance and taxation,” he said.

The NPCI International Payments Limited (NIPL), a wholly owned subsidiary of NPCI, is already involved in global digital empowerment and has undertaken initiatives across countries to enable cross-border acceptance of UPI. Besides Singapore, the Indian payment system has gained acceptance in the United Arab Emirates (UAE), Mauritius, Nepal and Bhutan.

India’s G20 Sherpa Amitabh Kant, who led the DPI push in Kumarakom, emphasised the open standards and interoperability of India’s digital products and highlighted their usefulness at a time when four billion people don’t have a digital identity and 133 countries don’t have a fast payment mechanism.

He said India’s approach includes creating awareness of DPI, putting together a fund, either through the G20 or international institutions, and putting in place some form of global institutional structure. “There’s a vacuum in the governance structure of DPIs and the G20 should throw this up,” he said.

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