India's remarkable Digital Public Infrastructure is making rounds internationally, Chinese India watcher documents
PM Modi's success in making Digital India and promoting its DPI abroad sets an example for China, Mao Keji writes.
Below is a translation of 毛克疾：印度数字基建，莫迪政府的“新王牌”？Mao Keji: India’s digital infrastructure - the Modi Government’s new trump card? published in 世界知识 World Affairs, a publication under China’s Ministry of Foreign Affairs.
Mao is a research associate at the International Cooperation Center of the National Development and Research Commission (NDRC) and an emerging India watcher in China. A Hindi speaker with master’s degrees from Tsinghua University and Johns Hopkins, Mao has written widely about India in Chinese media.
Mao Keji: India’s digital infrastructure - the Modi Government’s new trump card?
India, as the current rotating president of G20, hosted the Leaders' Video Summit on November 22, 2023. During the summit, Indian Prime Minister Modi vigorously promoted two global initiatives, namely the "Global Digital Public Infrastructure Repository" and the "Social Impact Fund", aiming to foster the development of Digital Public Infrastructure (DPI). Under Modi's direct urging, the G20 Digital Economy Working Group, directed by India's Ministry of Electronics and Information Technology, reached the first global consensus on DPI within the G20 framework after several rounds of negotiations.
India appears to have become the "spokesperson" for DPI, subliming this technical term to a forefront concept of global governance while extensively advocating it through multilateral organizations to the world, especially to countries in the "Global South". Many foreign media even termed DPI the "Indian version of the 'Belt and Road' initiative", and Microsoft co-founder Bill Gates said in March 2023 that "No country has built a more comprehensive digital infrastructure than India". But what is the current status of India's DPI construction?
The Development of India's DPI: A Remarkable Turnaround
If someone had visited India a decade ago, they would have known that the country's market then was dominated by cash. However, we have witnessed a huge change in recent years: the once marginalized communities who had lacked ID cards and bank accounts can now make transfers, payments, and even receive welfare and small loans subsidized by the government, as long as they have a mobile phone with internet access in hand. This transformation is largely attributable to the continuous development of India's DPI in recent years.
In India, DPI largely refers to the "India Stack" featured digital governance system, which was officially launched in 2009. Through standardized foundational protocols, the "India Stack" focuses on incorporating institutions with various attributes, scales, and services into a unified system. This system promotes the circulation of data, identity, and finance at a "population scale", to enhance the accessibility, application scale, and quality of India’s digital service. The "India Stack" consists of three separate yet closely related modules.
The first module is Aadhaar (known as "foundation" in Hindi), an identity authentication system as the foundational layer. Back then, in India, there were various ways to prove one's identity, including driving licenses, voter IDs, passports, etc., which made the verification process a confusing and time-consuming one. Meanwhile, those who hold official ID cards only took up less than half of the total population, which allows the opportunity to forge IDs. Around 2010, the Indian government introduced Aadhaar, linking citizens' photographs, fingerprints, and other biometric features with a 12-digit identity number. Up to August 2023, over 1.3 billion Indians have an Aadhaar number, covering almost all of India's adult citizens. Take banking services as an example. Using the customer's Aadhaar number, tellers can call the pre-stored biometric data from the database in a moment, making the process convenient for customers while significantly reducing the bank's workload. Furthermore, based on Aadhaar, the Modi government also launched the PMJDY scheme to promote bank account accessibility. Thus, Aadhaar forms the basis of the digitization of India's welfare, finance, and legal systems, and becomes a pillar in enhancing national strength under Modi's administration.
The second module is the Unified Payments Interface (UPI) as the application layer. Faced with a multitude of digital wallets and mobile payment platforms, the Modi government launched UPI in 2016 to integrate the fragmented payment systems of banks, the government, and non-bank financial intermediaries. Possessing an Aadhaar number and a smartphone, an Indian who has never had a bank account can use the UPI app-generated QR code or SMS to perform payments, receipts, and transfers across institutions. Users can also manage multiple accounts from different banks through the app, and even use the same set of username and password for services involving multiple entities. Notably, UPI also allows users to access various government services, including direct welfare transfer systems, which is of great help in eradicating corruption in welfare distribution. UPI has brought billions of people who have been marginalized by conventional financial services into the modern financial system, making India one of the world's largest digital payment markets.
The third module is the expansion layer which consists of the Digital Locker (DL) and the Account Aggregator (AA). Every online activity generates a digital footprint and leaves data behind. To manage the vast amount of data produced at every layer of the "India Stack," the Modi government released the digital storage for key documents and plans to introduce a key data-sharing intermediary. These digital infrastructures will largely replace traditional paper documents, significantly enhancing the efficiency and anti-counterfeiting capabilities of public services. In the future, AA will be able to verify individual identity and use financial asset certificates, debt conditions, and cash flow authorized by users to provide persona and documentation. It is noteworthy that Indian regulatory authorities plan to grant users more extensive control over data, which means that AA and platform companies can only store user data after their authorization.
The Internationalization of "Indian-Style Digital Governance"
The Modi government's continued efforts to promote the development of DPI have achieved appreciable success, enabling India, as a latecomer, to realize the world's largest increment of digital governance practice in recent years. Under the less-than-expected performance of "Make in India" and the lack of inclusivity in traditional high-end service outsourcing, the success of "Digital India" driven by DPI has given the Modi government great confidence. It provided India, which has long aspired to be the Vishvaguru, with a formidable diplomatic card. This explains why the Modi government has always been actively promoting the DPI-centered "Indian-style digital governance", highlighting its compatibility, advanced nature, and security. Notably, the Modi government has formulated targeted promotion strategies based on the characteristics of different international entities.
Firstly, to garner endorsements and channels for Indian-style digital governance, the Modi government pinpointed the pain points of mainstream international organizations such as inclusive finance, empowerment of marginalized groups, and poverty alleviation for vulnerable groups. Such long-term themes have been of high "moral value" in the United Nations, the World Bank, and the International Monetary Fund (IMF). The Modi government emphasized the inclusive nature of "Indian-style digital governance" and its technological superiority in bridging gaps, successfully gaining support from these organizations.
In July 2021, the IMF published the Stacking Up Financial Inclusion Gains in India and in March 2023, it released an enhanced report Stacking up the Benefits Lessons from India’s Digital Journey. In September 2023, just before the G20 Leaders Summit, the World Bank released the G20 Global Partnership for Financial Inclusion, praising that through DPI, India has achieved financial inclusion goals in 6 years instead of 47. The endorsement from mainstream international organizations significantly enhanced the authority and credibility of Indian-style digital governance, especially facilitating India to promote its governance models and technical standards to the "Global South" through diplomatic channels and economic support from international organizations.
Secondly, DPI focused on providing more fundamental solutions to address the problems the developing countries encountered during the process, thereby expanding the base for Indian-style digital governance. With Chinese manufacturers significantly reducing the cost of 4G equipment and the global spillover of science and technology enterprises, many developing countries are not lacking in mobile internet hardware and digital wallet applications, but rather in seemingly basic identity authentication systems. This presented a great opportunity for India. For example, according to the statistics of the World Bank, there are as many as 470 million people still lack "any form" of official identity verification in the Sub-Saharan region. To meet this demand, the Modi government launched the "Modular Open Source Identity Platform" (MOSIP) in 2018, offering other countries an identity verification technology solution similar to Aadhaar. The Philippines, as the first country to adopt the Indian model, has already issued digital identity cards to 76 million citizens. Furthermore, Ethiopia, Morocco, Sierra Leone, Guinea, and Togo have agreed to accept India's technical guidance and are pushing forward the construction of national digital identity systems.
Thirdly, the Modi government put attention on the pain points of domestic needs and those of neighboring countries to create a larger application space for Indian-style digital governance. For a long time, India's balance of payments has been highly dependent on overseas remittances; meanwhile, India is also a source of remittances for neighboring small and medium-sized countries. This two-way demand provides the Modi government with ample opportunity to expand Indian-style digital governance. For instance, to address the huge demand for overseas remittances, the Modi government linked UPI with Singapore's payment system Pay Now and the UAE's Neopay, significantly reducing remittance fees for Indian citizens working in these countries. Since 2022, the Modi government has also allowed citizens of Nepal and Bhutan to use UPI for cross-border remittances, substantially enhanced India's economic and financial penetration into these countries. Currently, the Modi government has made the connectivity of payment systems a highlight of its diplomatic strategy.
The Shortcomings of India's DPI Strategy: Why Play This Card?
During its tenure as the rotating presidency of the G20, India vigorously advocated for the adoption of an outcome document on DPI by the ministers of digital departments of the participating countries. India also established a consensual technical definition for DPI and laid out specific principles for its further promotion and development. What's more, the Modi government integrated DPI into the Global Partnership for Financial Inclusion (GPFI) action plan launched in collaboration with the World Bank. India's high-profile promotion of DPI raises another question: lacking powerful hardware manufacturers and global internet giants, why did India choose the road of digital economy governance?
The weaknesses of India's developing DPI are obvious. On the one hand, India still lacks the basic hardware capabilities required to build DPI. Although the Indian electronics assembly industry has made significant progress in recent years, India is still far from being able to provide a comprehensive solution from communication base stations, and networking devices to end-user mobile phones in the short and middle term. The absence of hardware supply capacity means that Indian-style digital governance cannot truly become a comprehensive solution, thereby reducing its appeal. On the other hand, India is short of market-tested independent software technologies. Despite the high global reputation of India's software industry, it has yet to produce a world-class native internet giant. After the expulsion of Chinese internet companies in 2020, the market has been dominated by American internet giants. The absence of native internet giants means that the Indian government cannot independently provide a complete set of technical solutions. It can only propose "client designs" such as standards, requirements, and models, and then seek foreign companies with relative capabilities to fulfill these designs.
Despite this, the Modi government's promotion of DPI still has two unique advantages: neutrality and compatibility. From a geostrategic perspective, in the context of intensifying Sino-American strategic competition, the Modi government's promotion of DPI offers a "third path," reducing the risk of "picking sides" in sensitive areas such as data and networks for some countries. From the standpoint of compatibility, the low starting point and viable foundation for India in developing DPI paradoxically become advantages. This means that Indian-style digital governance has lower initial requirements than American or Chinese models, making it more adaptable to "Global South" countries lacking in technological capabilities, financial strength, and national governance capacity.
The Modi government's global promotion of Indian-style digital governance marks the country's first true sense attempt to provide a "major power" public product. Its preliminary success also offers valuable experiences for China in further advancing the "Belt and Road" initiative. China possesses a complete hardware industry chain that Western countries lack, as well as native internet giants absent in India. On the one hand, within the framework of the "Digital Belt and Road," China can work with internet companies to offer a more comprehensive "full-package solution" that covers both software and hardware to cater to the needs of the "Global South". On the other hand, China can seize India's shortcoming of "design without implementation" to encourage Chinese companies to actively participate in DPI construction, thereby achieving the effect of "filling Indian bottles with Chinese wine."