India and Sri Lanka are in talks to launch the Unified Payments Interface (UPI) payment system in the island nation, a move that will boost bilateral trade and tourism. UPI is a real-time payment system that allows users to transfer money using a mobile app linked to their bank accounts.
UPI-Lanka Pay Agreement
The discussions on UPI’s early launch were held between the High Commissioner of India Santosh Jha and the Governor of the Central Bank of Sri Lanka (CBSL) Dr Nandalal Weerasinghe on January 9, 2024. The High Commissioner tweeted that India will continue to be a steadfast partner in Sri Lanka’s economic recovery and support its debt restructuring process. He also mentioned the growth in Indian rupee trade settlements between the two countries.
The agreement on UPI acceptance in Sri Lanka was signed by Prime Minister Narendra Modi and Sri Lankan President Ranil Wickremesinghe during the latter’s two-day visit to India in July 2023. The two leaders also announced the launch of ferry services between Nagapattinam in India and Kankesanthurai in Sri Lanka, which will enhance connectivity and people-to-people ties.
Benefits of UPI
Adopting UPI as a payment mode means people in both countries will be able to transfer funds in real-time by scanning the QR code or simply by entering mobile numbers linked to their bank accounts. It also means that Indians travelling to Sri Lanka will no longer need to carry foreign currency or use expensive international cards. Similarly, Sri Lankans visiting India will be able to use their local mobile wallets or bank apps to make payments.
UPI is a flagship initiative of the National Payments Corporation of India (NPCI), which aims to make digital payments accessible, affordable and secure for everyone. UPI has revolutionized the payment landscape in India, with over 4 billion transactions worth Rs 7.5 lakh crore in December 2023. UPI is also being adopted by other countries such as Singapore, Bhutan and UAE, making it a global standard for digital payments.
India-Sri Lanka Economic Ties
India is Sri Lanka’s largest trading partner, with bilateral trade amounting to USD 4.6 billion in 2022-23. India is also the largest source of tourists, with over 1 million arrivals in 2023. India has extended over USD 4 billion of development assistance to Sri Lanka, covering various sectors such as infrastructure, health, education, agriculture and energy. India has also provided substantial support to Sri Lanka during the COVID-19 pandemic, including vaccines, medical supplies and debt relief.
India and Sri Lanka share a close and multifaceted relationship, based on historical, cultural and religious ties. The two countries are celebrating their 75th anniversary of diplomatic relations in 2023-24, with several events and initiatives planned to mark the occasion. The launch of UPI payment system is expected to further strengthen the economic and people-to-people cooperation between the two neighbours.