India Pushes Faster Financial-Market Integration With Indonesia as UPI–QRIS and LCS Move Forward

JAKARTA, Investortrust.id — India’s Ambassador to Indonesia Sandeep Chakravorty urged both countries to accelerate long-delayed financial-market integration, calling the current disconnect an “air gap” that limits trade, investment, and capital-market development between two of Asia’s largest emerging economies.

Speaking at the Investortrust Capital Market Forum in Jakarta on Thursday, Chakravorty said India and Indonesia had built a strong economic foundation — with bilateral trade reaching US$30–40 billion over the past four years and each country ranking among the other’s top export markets. “But one area that still has a large gap is integration of the money market and capital market,” he said.

He described today’s forum as part of a broader push launched after President Prabowo Subianto’s official visit to New Delhi earlier this year. “We seem to be operating unmindful of the presence of each other,” he said. “That needs to change.”

Local-Currency Settlement, UPI–QRIS Implementation

Chakravorty confirmed that both governments had already signed a memorandum of understanding on local-currency settlement (LCS) between Bank Indonesia and the Reserve Bank of India. While the technical guidelines have yet to be finalized, he said officials are now “talking to each other,” despite central banks’ notoriously cautious posture.

“When LCS is implemented, transaction costs between India and Indonesia can come down by as much as 5 percent,” he said.

He also offered a rare update on UPI–QRIS interoperability, acknowledging that the process has been slowed by different switching architectures. India operates on a single UPI switch, while Indonesia uses four separate layers. Despite that, he said implementation is within sight. “Hopefully in the new year we will have integration,” he said. “When you go to India, you can pay with QRIS, and when you come to Indonesia, you can pay using the UPI app.”

Both initiatives, he added, are designed to unlock investment flows and reduce friction for businesses, investors, and retail users across the two markets.

Technology & Infrastructure: India’s Lesson for Indonesia

Investortrust CEO Primus Dorimulu opened the forum by calling technology the “greatest driver of financial and market inclusion,” citing India’s acceleration toward T+1 and its ongoing pilot of same-day settlement. He noted that India’s capital market — powered by the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) — has surpassed US$5 trillion, now one of the top five markets in the world.

Daily trading value on India’s exchanges averages US$11–15 billion, compared with roughly US$1 billion in Indonesia.

“India’s transformation was made possible by five-minute onboarding, ultra-low-cost trading, nationwide interoperability through UPI, and full digitalization of trading and settlement,” Dorimulu said.

Chakravorty echoed the role of digital infrastructure in reducing barriers for ordinary citizens. He singled out BSE’s modernization as an example, recalling a morning conversation with CEO Sundararaman Ramamurthy.

“He told me that when he joined, the share value of Bombay Stock Exchange was about five dollars, and since he has been CEO it has grown twenty times to almost one hundred dollars,” he said. “I wish I had bought your shares at that time.”

The ambassador added that technology should drive Indonesia’s next phase of capital-market reform. “Technology is one part that will be addressed today,” he said. “There is no point in reinventing the wheel.”

Integrating Market Ecosystems

Chakravorty also emphasized the importance of aligning market participants — regulators, fund managers, and communities seeking capital — across a framework he described as overlapping “Venn diagrams.”

“The intersection point should be as large as possible,” he said. “I will add one more Venn diagram, which is Indonesia. The intersection of these three and the fourth — Indonesia — should grow.”

He argued that deeper alignment is needed for Indonesia to strengthen market liquidity and attract long-horizon institutional capital. “Indonesia’s exchange is performing well among emerging markets, but market size, capitalization, and daily trading volumes need to change dramatically,” he said.

India’s own trajectory, he noted, reinforces the importance of scale. With more than 8,000 listed companies, retail investor penetration above 12%, and a US$5 trillion market capitalization equal to 140% of India’s GDP, the ambassador said Indonesia has significant room to grow — but also enormous potential.

Knowledge Transfer Begins, with More Expected

Chakravorty highlighted the recent visit of Indonesian Vice Finance Minister Thomas Djiwandono to India, where he met with BSE, SEBI, and leading asset managers. “He came back with many ideas, and I believe some of them will soon be implemented in Indonesia,” he said.

The envoy said the lessons Indonesia can draw from India are especially relevant because both nations share similar development characteristics. “The lessons we learn in India are more applicable in Indonesia than lessons from the West,” he said.

The Economic and Financial Dialogue between the two governments — delayed since the pandemic — is scheduled to resume next year. Chakravorty said financial-market cooperation will be a central agenda item.

“We are ready to support,” he said. “I hope concrete outcomes come out of today’s interaction.”