UPI Goes Global: India and Indonesia Seal Digital Payments and Strategic Partnership Deal

• India and Indonesia to link UPI with Indonesia’s payment system.

• UPI transactions surged to 241.62 billion in FY26, worth about $3.31 trillion.

• Bilateral trade stood at $24.78 billion in FY26.

• India’s trade deficit with Indonesia reached $15.8 billion.

• Defence, healthcare, steel and port cooperation agreements signed.

India and Indonesia have agreed to integrate their digital payment systems, paving the way for smoother and faster cross-border transactions. The announcement was made during Prime Minister Narendra Modi’s three-day visit to Indonesia, where he held talks with President Prabowo Subianto.

The integration will connect India’s Unified Payments Interface (UPI) with Indonesia’s domestic payment network. The initiative is aimed at facilitating business transactions and travel while expanding the international footprint of India’s digital public infrastructure.

UPI has already been rolled out in more than eight countries, including the UAE, Singapore, Bhutan, Nepal, Sri Lanka, France, Mauritius and Qatar. India has also signed cooperation agreements on digital public infrastructure with 23 nations, reflecting its broader ambition to export its digital architecture globally.

Since its launch, UPI has witnessed explosive growth. Annual transaction volumes rose from 20 million in FY17 to more than 241.62 billion in FY26—an almost 12,000-fold jump. The value of transactions climbed from ₹0.07 trillion to approximately ₹314 trillion over the same period. The FY26 transaction value stands at roughly $3.31 trillion, underscoring UPI’s scale.

Expanding the Strategic Canvas

Beyond digital payments, the two countries signed a range of agreements covering defence, healthcare, manufacturing and disaster management.

India and Indonesia concluded a deal for the supply of the BrahMos supersonic cruise missile system to Indonesia. Additionally, their coast guards will enhance cooperation to strengthen maritime safety and security in the Indian Ocean region.

In the healthcare sector, India’s Central Drugs Standard Control Organisation (CDSCO) and Indonesia’s National Agency of Drug and Food Control (BPOM) signed a memorandum of understanding to enhance collaboration on regulating medical products.

A major industrial initiative was also announced: a joint venture between the Steel Authority of India Ltd. (SAIL) and Indonesia’s PT Krakatau Steel to establish a stainless-steel slab manufacturing facility in Indonesia. This project is expected to deepen industrial cooperation and supply chain integration.

Indonesia unveiled the Indonesia Open Network (ION), inspired by India’s Open Network for Digital Commerce (ONDC), indicating Jakarta’s interest in adopting elements of India’s digital commerce framework.

Additional agreements included collaboration on rare earth magnet development between India’s Non-Ferrous Materials Technology Development Centre (NFTDC), Midwest Ltd. and Indonesia’s PT PERMINAS; electoral cooperation between India’s Election Commission and Indonesia’s General Elections Commission; and disaster management collaboration between the two nations’ respective authorities.

Strategic Context: Indo-Pacific Alignment

Analysts view the agreements as part of India’s broader Indo-Pacific strategy. Experts note that the visit aligns with New Delhi’s Act East Policy and its vision for a free, open and inclusive Indo-Pacific region.

Both leaders reaffirmed their shared commitment to strengthening the ASEAN-India Comprehensive Strategic Partnership. Modi emphasised India’s continued support for ASEAN centrality and highlighted the strong alignment between the two countries on regional issues.

Economic ties, however, remain asymmetrical. In FY26, India exported goods worth $4.49 billion to Indonesia, a decline of 16.52% from the previous year’s $5.38 billion. Imports from Indonesia fell 10.91% to $20.29 billion from $22.78 billion in FY25.

Total bilateral trade stood at $24.78 billion in FY26, down from $28.16 billion a year earlier. India’s trade deficit with Indonesia amounted to approximately $15.8 billion.

More broadly, merchandise trade between India and ASEAN reached $120.87 billion in FY24, comprising $41.20 billion in exports and $79.67 billion in imports, according to India’s Ministry of External Affairs.

Sabang Port and Maritime Strategy

India also expressed interest in partnering with Indonesia to develop Sabang Port. Leaders from both nations acknowledged that cooperation in Sabang could enhance institutional, physical and digital connectivity between India’s Andaman and Nicobar Islands and provinces in Sumatra.

The project holds strategic significance for India. Improved access to Sabang would strengthen India’s presence near the Malacca Strait, one of the world’s busiest and most critical shipping corridors. Simultaneously, India’s plans to develop Galathia Bay in Greater Nicobar as a major transshipment hub would give the country greater oversight across key maritime routes.

A Multi-Dimensional Partnership

The agreements announced during Modi’s visit illustrate a comprehensive deepening of ties between the two countries—spanning digital payments, defence cooperation, industrial collaboration and maritime strategy.

The linking of UPI with Indonesia’s payment system may be symbolic of a larger transformation. As India expands its digital infrastructure globally while strengthening strategic partnerships in Southeast Asia, the relationship with Indonesia appears poised to play a central role in shaping the next phase of Indo-Pacific cooperation.