As India's DPI 2.0 evolves UPI into universal data empowerment, boosting productivity and inclusion, it also needs interoperability, competition safeguards, and trust via consent to avoid exclusion
Digital Public Infrastructure (DPI) has transitioned from an aspirational concept to a foundational engine of India’s economic and governance architecture. India’s DPI began with Aadhaar-enabled identity and Unified Payments Interface (UPI) payments, and has now expanded into open digital commerce (ONDC), interoperable health IDs (Ayushman Bharat Digital Mission), education stacks, and consent-driven data environments. These platforms are not simply digital tools: they are public goods that reshape economic coordination, empower citizens, and redefine governance.
This essay analyses where India’s DPI stands in 2026, what recent policy actions reveal about its trajectory, and how DPI 2.0 can advance productivity, inclusion, competition, and governance.
India’s DPI journey rests on three foundational pillars: digital identity, real-time interoperable payments, and consent-based data mobility, with its policy and operational developments reinforcing all three while extending their reach into new domains.
While the Aadhaar digital identity remains the foundational building block of DPI, UPI is arguably the most visible example of DPI in action. Built by the National Payments Corporation of India (NPCI) as an open, interoperable platform, UPI has transformed India’s payments landscape by enabling instant, low-cost transactions between banks and fintech players. As of late 2025, UPI processed more than 20 billion transactions in a single month for the first time, and its total transaction value continued to rise, overtaking card-based systems in scale and usage. This rapid growth underscores the strength of interoperability combined with regulatory support.
NPCI has begun deploying AI-driven risk and fraud detection systems that proactively flag suspected fraudulent accounts and issue pre-transaction alerts to users before funds are transferred.
The NPCI has introduced technical upgrades to UPI, including biometric authentication options such as fingerprint and facial recognition, enhancing both security and user convenience by enabling two-factor authentication without reliance on OTPs. Complementing this, NPCI has begun deploying AI-driven risk and fraud detection systems that proactively flag suspected fraudulent accounts and issue pre-transaction alerts to users before funds are transferred. This iterative approach, combining stronger authentication with real-time, intelligence-led safeguards, reflects a pragmatic effort to balance security with usability, a balance that is critical for sustaining trust and deepening adoption among first-time, lower-income, and rural users.
The Open Network for Digital Commerce (ONDC) extends DPI into the e-commerce domain with ambitious implications. ONDC’s open protocols decouple discovery, ordering, payment, and fulfilment, enabling buyers and sellers to transact across applications rather than within proprietary walled gardens. This approach mirrors UPI’s interoperable design and aims to lower barriers for SMEs and local sellers typically locked out by dominant platforms. As of early December 2025, ONDC was operational in over 630 cities and had onboarded tens of thousands of sellers (1.16 lakh in the retail part), including small businesses and startups, expanding digital commerce beyond urban, large-brand ecosystems.
However, emerging reports from early 2026 signal that ONDC adoption remains uneven in practice, with local merchants reporting operational frictions and lower-than-expected order volumes, suggesting gaps between policy design and user experience on the ground. This highlights the challenge for DPI 2.0: catalysing widespread network effects not just on paper, but in daily commercial transactions.
One of the most consequential expansions of India’s DPI is its digital health ecosystem under the Ayushman Bharat Digital Mission, anchored by the voluntary, consent-based Ayushman Bharat Health Account (ABHA), which enables interoperable sharing of medical records across providers nationwide. By late 2025, over 50 crore ABHA IDs had been issued and more than 33 crore health records digitally linked, allowing instant registration and secure record access across ABDM-compliant platforms, while growing integration of hospitals, clinics, and labs through the Health Facility and Healthcare Professionals Registries—and policy moves such as Rajasthan’s point-of-care ABHA recording—signal the institutionalisation of digital health workflows without denying care to those outside the system.
A quieter but critical DPI frontier is spatial infrastructure, anchored by DIGIPIN, a geo-coded digital addressing system developed by the Department of Posts with IIT Hyderabad and ISRO’s NRSC, which assigns a unique alphanumeric code to every 4×4 metre grid in India.
Similar sectoral expansion is visible in agriculture through AgriStack, a farmer-centric DPI designed to enable interoperable land, crop, and scheme data to improve targeting, service delivery, and farmer access to public and private services, underscoring the broader shift from standalone platforms to domain-specific digital public goods.
Beyond health and agriculture, India’s DPI extends into education through the National Academic Depository, a government-backed, DigiLocker-integrated digital repository that enables secure issuance, access, and verification of academic credentials, sharply reducing reliance on physical documents and curbing fraud. With over 103 crore authenticated digital awards already lodged and policy pushes such as Tamil Nadu’s 2025 draft mandating online certificate issuance and uploading, NAD is institutionalising credential portability, lifelong learning, and workforce mobility across regions and sectors.
Similarly, a quieter but critical DPI frontier is spatial infrastructure, anchored by DIGIPIN, a geo-coded digital addressing system developed by the Department of Posts with IIT Hyderabad and ISRO’s NRSC, which assigns a unique alphanumeric code to every 4×4 metre grid in India. Designed as an open, interoperable address layer complementing postal PIN codes, DIGIPIN enables precise location identification for logistics, e-commerce, emergency response, and public service delivery, while supporting address-as-a-service models that integrate spatial accuracy into health services, welfare targeting, asset tracking, and disaster management.
These advances across health, education, and spatial addressing signal a strategic evolution in India’s DPI—from isolated digital platforms to interoperable public infrastructures serving multiple sectors in tandem. ABHA now underpins not only seamless health record access but also public health analytics, facility oversight, and digital frameworks for insurance and telemedicine; the National Academic Depository recasts credentials as trusted digital public goods that strengthen human capital markets; and DIGIPIN supplies the locational backbone essential for logistics, service delivery, and emergency response. Together, they constitute a multi-sector DPI architecture in which shared digital goods reduce duplication, enable consent-driven data flows, and widen service reach, even as future layers demand policy designs centred on interoperability, equity, data protection, and robust public oversight.
Interoperable, modular platforms such as UPI and ONDC have boosted productivity by lowering transaction costs, reducing platform dependence, and enabling combinatorial innovation across banks, fintechs, and service providers, while Aadhaar-enabled Direct Benefit Transfers have routed subsidies directly to beneficiaries, saving trillions of rupees by cutting duplication and leakage.
The expansion of DPI delivers measurable gains in productivity, inclusion, and governance, but only when policy design actively confronts structural barriers. Interoperable, modular platforms such as UPI and ONDC have boosted productivity by lowering transaction costs, reducing platform dependence, and enabling combinatorial innovation across banks, fintechs, and service providers, while Aadhaar-enabled Direct Benefit Transfers have routed subsidies directly to beneficiaries, saving trillions of rupees by cutting duplication and leakage. DPI has also widened inclusion across finance, health, and identity systems, yet persistent frictions: technical failures, uneven institutional readiness, and limited local capacity, show that digital access alone does not guarantee participation without offline support, local capacity building and service preparedness. Its governance value ultimately rests on trust: the operationalisation of the Digital Personal Data Protection Act, 2023, strengthens consent and accountability, but the scale of Aadhaar and UPI heightens cybersecurity risks, and emerging AI integrations within DPI demand careful attention to fairness, safety, and algorithmic oversight.
The next phase of India’s DPI, often framed as DPI 2.0, must consolidate existing gains while ensuring that platforms remain open, competitive, and anchored in public values. At its core, this requires treating interoperability not as an afterthought but as a design default. Governments need to codify common standards for APIs, data exchange, and cross-platform compatibility across procurement rules, platform certification, and service delivery guidelines, so that identity, health, education, and commerce systems function as connected layers rather than siloed digital islands. Such standardisation lowers entry barriers, allowing startups and smaller firms to build on shared infrastructure without discretionary gatekeeping.
As DPI scales, safeguarding competition becomes equally critical. At present, India’s UPI ecosystem is dominated by just two players—PhonePe and Google Pay—which together account for over 80 percent of all transactions. While public infrastructure democratises access, private platforms can still accumulate disproportionate power through data concentration and network effects. Effective DPI governance, therefore, demands strong data portability and API access mandates, the strengthening of competition authorities with digital economy expertise, and continuous monitoring of concentration risks—as seen in regulatory debates around transaction caps in digital payments to prevent duopolistic dominance.
Sustained investment in digital literacy, particularly in rural and non-English contexts, is essential to ensure that the benefits of interoperable infrastructure translate into genuine participation rather than a new layer of exclusion.
Trust, meanwhile, hinges on robust consent economies and data governance. Consent frameworks must be both meaningful and scalable, enabling individuals to exercise fine-grained control over what data is shared, with whom, and for how long, supported by transparent audit trails that allow permissions to be tracked and revoked. This is especially vital in sensitive domains such as health and education, where secondary data use without explicit authorisation can undermine public confidence and legitimacy.
Finally, inclusion must move beyond access to effective use. DPI 2.0 will succeed only if digital systems are complemented by last-mile support—assisted service centres, offline fallbacks, and responsive grievance mechanisms—alongside feedback loops that surface real-world failures in platforms like DigiLocker or ONDC. Sustained investment in digital literacy, particularly in rural and non-English contexts, is essential to ensure that the benefits of interoperable infrastructure translate into genuine participation rather than a new layer of exclusion.
India’s DPI journey, from interoperable payments and open commerce to digital health, education, and address stacks, shows that purposeful architectural design matters: when public infrastructure is open, modular, and backed by strong legal frameworks, it can boost productivity, widen inclusion, and strengthen trust in governance. Yet the promise of DPI 2.0 comes with clear policy responsibilities, as infrastructure alone is insufficient without the norms, governance mechanisms, and competitive guardrails that ensure it serves all citizens and businesses, not merely the technologically adept or economically powerful. If policymakers act decisively on interoperability, competition, data governance, and user inclusion, India’s DPI can remain a global exemplar—not just in digital performance, but in demonstrating how digital public goods can support equitable, resilient, and human-centric growth.
Amal Chandra is an Indian author, public policy analyst, and political commentator.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
Amal Chandra is an Indian author, public policy analyst, and political commentator. His debut book, The Essential (2023), launched by Dr. Shashi Tharoor— with whom ...
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