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Digital Diplomacy Paves Road to Internationalizing DPIs

20 Oct 2023

India’s proactive endeavors to internationalize its DPI successes are gaining global attention, as evidenced by the GPFI report during its G20 Presidency. The nation’s dedication to shaping the global digital landscape is evident through collaborative efforts with countries such as the United States and France and active participation in multilateral organizations like the SCO and G20. This digital diplomacy is paving the way for developing inclusive and interconnected digital societies worldwide, opening up numerous opportunities for Indian companies and startups to provide innovative solutions globally.

This global acclaim was highlighted in the GPFI report released during India’s G20 Presidency. The report underscores India’s remarkable achievement of expanding financial inclusion from 25 percent in 2008 to over 80 percent of adults in just six years, a feat attributed to the strategic deployment of DPIs. The government-to-person (G2P) payment system, powered by DPIs, has emerged as one of the world’s most extensive digital platforms, facilitating direct transfers of approximately $361 billion to recipients across 53 central government ministries and 312 vital programs. This recognition underscores the international community’s admiration for India’s groundbreaking digital initiatives.

Diplomatic Developments

India and the United States have jointly expressed their commitment to providing global leadership in implementing Digital Public Infrastructures (DPIs). This partnership aims to advance the development and deployment of robust DPIs while emphasizing the importance of privacy, data security, and intellectual property safeguards. The proposal for the India-U.S Global Digital Development Partnership signifies their dedication to leveraging technology and resources to support DPIs in developing nations.

India-France collaboration in exploring the broader impact of joint DPI projects across various sectors is a significant milestone in its DPI initiatives. France is poised to become the first European country to adopt India’s Unique Payments Interface (UPI) through the agreement between India’s NPCI International Payments Limited (NIPL) and France’s Lyra Collect. This partnership highlights a shared belief in the DPI approach to usher in open, democratic, and inclusive digital economies.

India has signed Memorandums of Understanding (MoUs) with four countries– Armenia, Sierra Leone, Suriname, and Antigua & Barbuda, committing to share its digital solutions implemented at a population scale. This demonstrates India’s dedication to promoting DPIs on an international scale. Such agreements facilitate the transfer of knowledge and expertise in digital infrastructure, furthering the adoption of DPIs worldwide.

India’s Presidency of the Shanghai Cooperation Organisation (SCO) has led the member states to unanimously adopt India’s proposal for deploying DPI as the right way to implement digital technology for inclusive growth within the region. The proposal supports developing and adopting Digital Public Infrastructure (DPI), encompassing key platforms like Aadhaar, Unified Payments Interface (UPI), and DigiLocker.

Historic Consensus in G20

Global Partnership for Financial Inclusion (GPFI) has published a report titled ‘G20 Policy Recommendations for Advancing Financial Inclusion and Productivity Gains through Digital Public Infrastructure (DPI).’ The document reflects the consensus achieved between the G20 countries on DPIs as a path for enabling global financial inclusion & productivity gains. Sahamati has been a Knowledge Partner to the Ministry of Finance (MoF) in crafting this report. The recognition of Account Aggregators (AAs) as a model path for consented data sharing worldwide is a noteworthy achievement for the ecosystem.

The report highlighted that India’s Data Empowerment and Protection Architecture (DEPA) allows individuals to manage their data, enabling them to share it with different service providers. This simplifies access to personalized products and services without demanding significant investments from new players in building customer connections promoting innovation and competition.

India’s G20 presidency has strongly emphasized advancing digital public infrastructure, enhancing financial inclusion, and championing innovation, notably through initiatives like the G20 Task Force on Digital Public Infrastructure. This leadership has played a pivotal role in internationalizing DPIs, promoting Sustainable Development Goals, and endorsing collective commitments to leverage DPIs for broader developmental goals. The G20 2023 Financial Inclusion Action Plan further outlines a forward-looking approach, particularly for individuals and MSMEs, highlighting technological innovation and digital infrastructure. India’s role as a Co-Chair of the Global Partnership for Financial Inclusion solidifies its leadership in implementing DPIs.

Significance of DPI Internationalization

The internationalization of Digital Public Infrastructures (DPIs) is poised to benefit the Indian ecosystem substantially. Individuals will gain access to real-time international payments and streamlined identity verification, simplifying global interactions. Small and Medium-sized Enterprises (MSMEs) can leverage import/export data to secure credit and expand their international footprint, potentially elevating Indian manufacturing brands to global recognition. DPIs will facilitate cross-border use cases like visa applications and invoice discounting for imports/exports, making international transactions more efficient.

Opportunities for the AA Ecosystem

Data Empowerment and Protection Architecture (DEPA) represents a first-of-its-kind techno-legal approach to data protection and consent-based data sharing that empowers consumers to harness data for their benefit. Within the financial sector, the Account Aggregator (AA) framework is the first functional implementation of DEPA. The DPI approach to open data and open finance aims to provide consumers access to better financial services. It holds significant potential as a global public good, especially for developing nations.

The ramp-up of the AA protocol worldwide will empower consumers by granting control over their data, fostering trust in digital services. A combinatorial innovation can be unleashed by enabling consent-based data sharing across national jurisdictions. FIUs could serve customers across countries, solving cross-border use cases. Indian startups and companies could be catapulted into global brands.

Conclusion

Indian leadership in internationalizing DPIs is commendable, underscoring a rising India with ambitions to shape future global trends. This endeavor holds the potential to unlock significant value for the Account Aggregator (AA) ecosystem, the broader Indian industry, and consumers alike. As India continues to spearhead digital innovation, the benefits of this proactive approach are poised to reach far and wide, setting the stage for a more interconnected and digitally empowered world.

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