What is Digital Public Infrastructure (DPI)?
DPI refers to foundational digital systems that enable essential functions for a society, such as identity, payments, and data exchange. They are built on open standards and are often interoperable, allowing for broad public and private sector use.
India Stack: A Leading DPI Model
India Stack is a prime example of a comprehensive DPI. It is an open-source, national-scale platform that has successfully digitized public and private services in India. Key components include:
- Aadhaar: A biometric-based digital identity system.
- UPI (Unified Payments Interface): A real-time payments system.
- DigiLocker: A secure cloud-based document wallet.
- Account Aggregator: A framework for secure data sharing.
- ONDC (Open Network for Digital Commerce): An open protocol for e-commerce.
India is now actively promoting this model globally, positioning itself as a "Vishwaguru" (world teacher) in digital governance.
Dedollarization: The New Global Financial Order
Dedollarization is the process of reducing the world's dependence on the US dollar as the primary reserve currency and global payment rail.
Historically, the US dollar has dominated international trade and finance, largely due to:
- The Bretton Woods agreement.
- The petrodollar system.
- The SWIFT messaging network.
- The Fedwire system for US dollar settlements.
This system gives the US significant financial and political power, including the ability to impose sanctions.
The Role of DPI in "Digital Dedollarization"
The emergence of DPI, spearheaded by platforms like India Stack, is creating a new model for international payments that bypasses the traditional dollar-centric system.
| Old Model | New Model |
|---|---|
| SWIFT, USD, Fedwire | DPI-based payment rails |
| Dollar as intermediary | Direct currency swaps |
| Western payment processors (Visa, MasterCard) | Sovereign payment systems (UPI, BRICS Pay, mBridge, etc.) |
| US-centric financial governance | Multi-polar payment standards |
This new model, which we can call "Digital Dedollarization," leverages technology to build alternative, resilient financial infrastructure.
India's Role in Digital Dedollarization
India is at the forefront of this movement by piloting cross-border UPI linkages with countries like:
- Singapore
- UAE
- France
- Bhutan
- Nepal
These linkages enable:
- Cheaper, faster remittances and trade settlements.
- Direct payments in local currencies, bypassing dollar conversion.
- Increased financial inclusion for merchants and small businesses.
Beyond payments, India’s Account Aggregator and ONDC models can be exported as trusted, secure, non-Western digital infrastructure for countries in the Global South. This offers an alternative financial ecosystem that is not subject to Western sanctions or control.
The Long-Term Vision for the Global South
The vision is to create a globally interoperable DPI layer that:
- Enables seamless, instant digital payments between countries.
- Gradually reduces exposure to USD-based financial systems.
- Utilizes regional trade agreements and platforms like BRICS to scale adoption.
This gives nations greater financial sovereignty and resilience.
China vs. India: The De-dollarization Competition
Both China and India are building alternative payment systems, but their approaches differ significantly.
| China | India |
|---|---|
| Building a state-controlled Digital Yuan (e-CNY, CBDC) | Piloting an open, public-private Digital Rupee |
| Pushing a closed "Belt & Road Digital Currency" model | Promoting open-source DPI via the "50-in-5" initiative |
| Relies on a closed tech stack (Huawei, ZTE) | Offers the open-source India Stack export model |
Many Global South nations find India's approach more appealing—it's cheaper, more open, and less politically risky than a China-centric model.
The US Perspective
The US recognizes that the dollar's dominance is facing challenges. It is also wary of China's growing digital influence. For this reason, the US may indirectly support India's DPI export because it would prefer India to build these systems rather than China.
However, the long-term risk for the US is that as DPI layers take hold, many small to medium trade transactions will be settled directly in local currencies, leading to a slow but significant erosion of dollar flows and its associated power.
The Big Picture
✅ DPI (like India Stack) → enables
✅ Trusted sovereign digital payments → enables
✅ Bilateral & regional trade in local currencies → weakens USD as global intermediary → slow dedollarization
DPI is not just technology—it's the foundation of financial sovereignty.
Top comments (0)