India, Indonesia move to link digital payments as Modi visit deepens strategic ties
The two countries agreed to integrate their digital payment systems and signed a series of agreements spanning defence, healthcare, manufacturing and maritime security, underscoring New Delhi's push to deepen ties with a key Southeast Asian partner.
INDIA and Indonesia are set to link their digital payment systems, allowing 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 improving the ease of doing business and travel between the two countries, as India seeks to expand the global footprint of its digital public infrastructure.
India’s UPI system is currently available in more than eight countries, including the UAE, Singapore, Bhutan, Nepal, Sri Lanka, France, Mauritius and Qatar, according to a 6 February official statement. India has also signed memorandums of understanding or cooperation agreements on digital public infrastructure with 23 countries.
UPI transactions have grown sharply since the platform’s launch, with annual transaction volumes rising from 20 million in FY17 to more than 241.62 billion in FY26, an almost 12,000-fold increase, according to government data. Transaction value during the period rose from ₹0.07 trillion to around ₹314 trillion, an increase of more than 4,000 times.
Strategic deepening
The two countries also announced a series of agreements spanning defence, healthcare, manufacturing and disaster management, underscoring efforts to widen cooperation between India and a key Southeast Asian partner.
India and Indonesia signed an agreement for the supply of the BrahMos supersonic cruise missile system to Indonesia. Their coast guards will also work together to strengthen maritime safety and security in the Indian Ocean.
In healthcare, 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 strengthen cooperation on medical product regulation.
The two sides also announced a strategic 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.
Indonesia also launched the Indonesia Open Network (ION), modelled on India’s Open Network for Digital Commerce (ONDC) architecture.
Other agreements included an MoU between the Non-Ferrous Materials Technology Development Centre (NFTDC), Midwest Ltd. and PT PERMINAS for developing rare earth magnets; an MoU between the Election Commission of India (ECI) and Indonesia’s General Elections Commission (KPU); and an MoU between India’s National Disaster Management Authority (NDMA) and Indonesia’s National Agency for Disaster Management.
Strategic experts said the agreements reflect New Delhi’s effort to strengthen ties with Indonesia across digital, financial and defence domains as it advances 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 the push for an open and inclusive Indo-Pacific,” said Shweta Singh, associate professor, Department of International Relations, Faculty of International Studies, South Asian University.
"This is both strategic and calibrated, as India moves in the direction of refuelling the Indo-Pacific arc with an eye on long-term maritime safety, security and partnerships," Singh said.
Economic ties, however, remain tilted in Indonesia’s favour. India exported goods worth $4.49 billion to Indonesia in FY26, down 16.52% from $5.38 billion in FY25. Imports from Indonesia declined 10.91% to $20.29 billion from $22.78 billion in the previous financial year.
Bilateral trade stood at $24.78 billion in FY26, compared with $28.16 billion in FY25, while India’s trade deficit with Indonesia was about $15.8 billion.
"India and Indonesia continue to deepen their cooperation on global issues as well. There is strong synergy in our respective outlooks on the Indo-Pacific. India has always attached special importance to Asean centrality," Modi said.
The two leaders also discussed regional and global issues of mutual interest and ways to further strengthen the Asean-India Comprehensive Strategic Partnership.
Earlier this year, the 12th round of negotiations to review the ASEAN-India Trade in Goods Agreement (AITIGA) was held on March 30, 2026, at the ASEAN Secretariat in Jakarta.
According to the Ministry of External Affairs, merchandise trade between India and the Association of Southeast Asian Nations (Asean) reached $120.87 billion in FY24, comprising exports worth $41.20 billion and imports worth $79.67 billion.
India also showed interest in partnering with Indonesia to develop Sabang Port. Both leaders recognized that such a partnership would foster institutional, physical, digital and flow of people and commodities between Andaman and Nicobar Islands of India and Provinces in Sumatra Island.
The concerned authorities of both the nations will work out the scope, modalities and financing of the project, consistent with Indonesia’s development plans and applicable regulations, in a time-bound and mutually beneficial manner.
The port is of strategic interest for India as its development would allow India easier access to the Malacca Strait, a narrow stretch of water between Indonesia and Malaysia and one of the world’s most important shipping lanes.
India's plan to develop Galathia Bay in the Greater Nicobar area as a major transhipment hub, would also provide the country with eyes on both sides of the major trading and shipping route giving the country a strategic edge.
