India, Indonesia move to link digital payments as Modi visit deepens strategic ties | Today’s news

NEW DELHI: India and Indonesia are set to link their digital payment systems, enabling faster and easier cross-border transactions, as the two countries seek to expand economic and strategic cooperation.

The agreement to integrate India’s Unified Payments Interface (UPI) with Indonesia’s payment system was announced by Prime Minister Narendra Modi on Tuesday during a joint statement with Indonesian President Prabowo Subianto, part of Modi’s three-day visit to the country.

The move is aimed at facilitating business and travel between the two countries as India seeks to expand the global footprint of its digital public infrastructure.

Quick answers to key questions

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The main purpose of linking India’s UPI with Indonesia’s payment system is to facilitate faster and simpler cross-border transactions, thereby facilitating business and travel between the two countries.

India’s digital public infrastructure, including UPI, is expected to expand its global footprint by strengthening economic and strategic ties with Indonesia, promoting better transaction capabilities and cooperation agreements.

India is focusing on strengthening economic ties with Indonesia under its Act East Policy to strengthen bilateral relations, promote trade and promote cooperative initiatives in various sectors, including defense and technology.

Some of the specific agreements signed include cooperation on the BrahMos missile system, the development of Indonesia’s electronic voting machines, and a series of memorandums on maritime security and health cooperation.

The collaboration on electronic voting devices will help Indonesia transition from the traditional paper voting system to digital voting, increasing the efficiency and integrity of its electoral processes for the upcoming 2029 elections.

India’s UPI system is currently available in more than eight countries, including the United Arab Emirates, Singapore, Bhutan, Nepal, Sri Lanka, France, Mauritius and Qatar, according to an official statement on February 6. India has also signed MoUs or cooperation agreements on digital public infrastructure with 23 countries.

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UPI transactions have grown sharply since the launch of the platform, with annual transaction volumes rising from 20 million in FY17 to over 241.62 billion in FY26, a nearly 12,000-fold increase, according to government data. The transaction value during the period increased from ₹0.07 trillion to approx ₹314 trillion, a more than 4,000-fold increase.

Strategic deepening

The two countries also announced a number of agreements covering defence, healthcare, manufacturing and disaster management, underscoring efforts to expand cooperation between India and the key Southeast Asian partner.

India and Indonesia have signed an agreement to supply the BrahMos supersonic missile system to Indonesia. Their coast guards will also work together to strengthen maritime safety and security in the Indian Ocean.

In the health sector, India’s Central Drug Standards Organization (CDSCO) and Indonesia’s National Drug and Food Control Agency (BPOM) signed a memorandum of understanding to strengthen cooperation in the field of drug regulation.

The two sides also announced a strategic joint venture between Steel Authority of India Ltd. (SAIL) and Indonesia’s PT Krakatau Steel to set up a stainless steel plate plant in Indonesia.

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Indonesia has also launched the Indonesia Open Network (ION), modeled after India’s Open Network for Digital Commerce (ONDC) architecture.

Other agreements included a memorandum of understanding between the Non-Ferrous Materials Technology Development Center (NFTDC), Midwest Ltd. and PT PERMINAS for the development of rare earth magnets; a memorandum of understanding between the Election Commission of India (ECI) and the General Election Commission of Indonesia (KPU); and a memorandum of understanding between India’s National Disaster Management Authority (NDMA) and Indonesia’s National Disaster Management Agency.

Strategy experts said the deals reflect New Delhi’s drive to strengthen ties with Indonesia across digital, financial and defense fields as it pushes forward with its Indo-Pacific strategy.

“PM Modi’s visit to Indonesia needs to be read more comprehensively against the backdrop of India’s Act East Policy, MAHASAGAR Vision and push for an open and inclusive Indo-Pacific,” said Shweta Singh, Associate Professor, Department of International Relations, Faculty of International Studies, South Asian University.

“It is both strategic and calibrated as India moves towards refueling in the Indo-Pacific arc with long-term maritime safety, security and partnership in mind,” Singh said.

However, economic ties remain tilted in Indonesia’s favor. India exported goods worth $4.49 billion to Indonesia in FY26, down 16.52% from $5.38 billion in FY25. Imports from Indonesia fell 10.91% to $20.29 billion from $22.78 billion in the previous financial year.

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Bilateral trade was $24.78 billion in FY26, compared to $28.16 billion in FY25, while India’s trade deficit with Indonesia was about $15.8 billion.

“India and Indonesia continue to deepen cooperation on global issues as well. There is a strong synergy in our views on the Indo-Pacific. India has always attached special importance to the centrality of Asean,” Modi said.

The two leaders also discussed regional and global issues of common concern and ways to further strengthen the Asean-India Comprehensive Strategic Partnership.

Earlier this year, the 12th round of ASEAN-India Trade in Goods Agreement (AITIGA) Review Talks was held at the ASEAN Secretariat in Jakarta on 30 March 2026.

According to the Ministry of External Affairs, trade in goods between India and the Association of Southeast Asian Nations (Asean) reached $24,120.87 billion in the fiscal year, of which exports were worth $41.20 billion and imports were $79.67 billion.

India has also expressed interest in partnering with Indonesia to develop the Sabang port. The two leaders acknowledged that such a partnership would promote institutional, physical, digital and people and commodity flow between India’s Andaman and Nicobar Islands and Sumatra Island Provinces. The concerned authorities of the two nations will work out the scope, methods and financing of the project in accordance with Indonesia’s development plans and applicable regulations, in a time-bound and mutually beneficial manner.

The port is of strategic interest to India as its development would give India easier access to the Strait of Malacca, a narrow stretch of water between Indonesia and Malaysia and one of the world’s most important sea routes. India’s plan to develop the Gulf of Galathia in the Great Nicobar region as a major transshipment point would also give the country eyes on both sides of the main trade and shipping route, giving the country a strategic advantage.