India in talks with Indonesia over UPI linkage, rupee trade settlement

Days after Prime Minister Narendra Modi announced the introduction of the Unified Payments Interface (UPI) in France, it has emerged that New Delhi is looking to seal a similar deal with Indonesia. The two countries are looking to approve bilateral trade in their domestic currencies, real-time card recognition and digital payments - a move which will facilitate the use of UPI and similar tools. 

The development took place during Indian Finance Minister Nirmala Sitharaman's meeting with her Indonesian counterpart Sri Mulyani Indrawati on the sidelines of the G20 meeting of Finance Ministers and Central Bank Governors (FMCBG) in Gandhinagar in the western state of Gujarat. 

“The areas of cooperation include bilateral investment, financial services and infrastructure development, among others. For instance, India has developed expertise in digital public infrastructure. It can provide time-tested solutions for convenient and affordable digital payments, which can assist Indonesia in achieving its financial inclusion goals," said Sitharaman after the meeting. 

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Earlier, India had signed an MoU with UAE to set up a framework to settle cross-border transactions in local currencies and link the fast payment systems. 

"Like UAE, there are talks going on with Indonesia on something similar: real-time settlement and trading in local currencies. Talks are going on. It will get done soon," a source close to the matter was quoted as saying by Moneycontrol. 

If the deal goes through, it could be massive for both countries. Currently, Indonesia is India's largest trading partner in the ASEAN region, with bilateral trade pegged around $39 billion last year. 

UPI introduced in France

Last week, during PM Modi's two-day visit to France, it was announced that the European nation would adopt India's revolutionary payments system. The Indian PM said an agreement was in place and the first UPI transaction would occur at the Eiffel Tower where tourists could pay in Indian rupees. 

"India and France have agreed to use UPI in France. In the coming days, it will begin from the Eiffel Tower, which means Indian tourists will now be able to pay in rupees," said PM Modi during his speech. 

The development comes after the National Payments Corporation of India (NPCI), the governing body of UPI, signed an MoU with France's fast and secure online payment system, Lyra, last year. 

Also read | Indian tourists at Eiffel Tower can pay in rupees as PM Modi announces UPI use in France

UPI in India

It was in 2016 that NPCI introduced the UPI system to the country. PhonePe was one of the first platforms to integrate UPI into its system. A year later, several competitors followed suit and since then, UPI has transformed into a behemoth that even foreign nations are looking to get their hands on.

The UAE, Singapore, Nepal and Bhutan have already adopted UPI, with a few more countries waiting to join the bandwagon. 

The payment infrastructure recorded a whopping 9.93 billion transactions in June, with the total value touching Rs 14.75 trillion, according to NPCI. 

(With inputs from agencies)

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