One of the defining development models of the decade has been the Digital Public Infrastructure (DPI). In the past, infrastructure was limited to roads, ports, and electrical networks; today it increasingly encompasses digital identification systems, interoperable payment platforms, data sharing frameworks, and digital public services. 

India has emerged as the poster child for this transition with Aadhaar, the Unified Payments Interface (UPI), DigiLocker, and the Account Aggregator framework. In its 2023 G20 presidency, New Delhi skillfully shifted DPI from a domestic governance framework to an international development agenda. 

Similar digital ecosystems are also emerging as major investments for South Asian nations such as Bangladesh, Nepal, Bhutan, and Sri Lanka. But at the heart of the buzz around digital transformation lies a core policy question: Will Digital Public Infrastructure bridge South Asia’s developmental gaps, or will it deepen existing inequalities within and across countries? 

Trigger for Regional Integration?

The urgency of this subject comes out when looked at in the context of the region's developmental character. South Asia is home to around 2 billion people, which is about a quarter of the world’s population, but remains one of the least digitally integrated regions on the planet. The World Bank has estimated that South Asia’s gross domestic product will cross $4.5 trillion by 2025, but economic integration is still rather weak. Intra-regional trade makes up only 5% of total trade in the region, relative to about 23% in ASEAN, 49% under the USMCA, and almost 60% in the European Union. High transaction costs, fragmented payment systems, time-consuming customs procedures, and poor cross-border financial connection continue to hinder regional business. 

In this sense, DPI is being increasingly viewed not as a governance reform per se, but as a possible trigger for regional integration. India's experience shows what a revolutionary digital infrastructure can be. Aadhaar is the world's biggest biometric identity system, having enrolled over 1.4 billion residents. UPI has revolutionized the financial landscape of India. In June 2025, over 18.39 billion transactions worth over ₹24 lakh crore were recorded, growing over 35% on a year-on-year basis. Digital payments have moved from big cities to rural villages, enabling even small vendors to join the formal financial system through QR-code transactions. 

Digital Governance Exporter

Since the inception of the Direct Benefit Transfer (DBT) scheme, around ₹44 lakh crore has been directly transferred to the bank accounts of the beneficiaries. It has also curbed leakages in welfare delivery by removing duplicate and ghost beneficiaries. These achievements have positioned India as a digital governance exporter. Singapore, Nepal, Bhutan, France, Mauritius, Sri Lanka, and the United Arab Emirates have already established UPI connectivity, and more than 50 countries have expressed interest in replicating aspects of India Stack’s open digital infrastructure. 

India Stack is an interoperable public digital infrastructure that can be adapted by governments to their own requirements, unlike proprietary technology platforms built by global companies. For many developing countries, especially in the Global South, it provides an attractive alternative to expensive proprietary digital systems. 

Other governments in the South Asia region have begun to pursue their own digital transformation agendas, but from rather different perspectives. Bangladesh’s “Smart Bangladesh 2041” vision is an extension of the previous Digital Bangladesh project that digitized over 330 government services. Mobile financial services have exploded, and bKash, with over 80 million registered users today, is now one of the world’s top mobile financial services providers. 

Nepal has made progress in digital payments with its National Payment Switch and interoperable QR systems, while Sri Lanka has ramped up efforts to develop a national digital identification platform after its economic catastrophe. 

Bhutan, with a population of less than 800,000, has embraced digital governance in public administration through e-government initiatives and digital citizen services. 

Unequal Digital Ecology

But for all these advances, the digital ecosystem in South Asia remains profoundly unequal. But even as these developments take place, South Asia’s digital ecology remains deeply unequal. Internet availability and use vary widely between countries and between urban and rural populations. But a large part of the population still faces problems of device affordability, patchy connectivity, low levels of digital literacy, and a lack of digital infrastructure.  

So digital infrastructure starts from a very unequal base. As urban areas are increasingly adopting digital payment and online public services, large swathes of the rural population are still facing unstable connectivity, low digital literacy, and a lack of adequate digital equipment. The gender dimension is particularly important. South Asia’s mobile internet gender gap shrank to 25% in 2025 from 33% in 2024, according to GSMA’s Mobile Gender Gap Report 2026. But some 330 million women in the region still do not use mobile internet, pointing to the persistent structural barriers to digital inclusion. 

Discrepancies in smartphone ownership continue to be striking in Pakistan and Bangladesh. The results cast doubt on the assumption that digital identity equates to digital inclusion. Access to welfare systems, banking services, health care, and education increasingly depends on digital platforms, which puts current gender inequalities at risk of being digitally embedded. Also, financial inclusion is a mixed bag. 

Over the past 10 years, adult account ownership has surged in South Asia, largely due to government schemes and mobile financial services, according to the World Bank’s Global Findex Database. Pradhan Mantri Jan Dhan Yojana and Aadhaar-linked banking have helped India to reach more than 80% adult account ownership.  

Bangladesh has seen rapid growth in digital financial services through mobile money, while Nepal has made significant strides in formal financial access. But having a bank account does not always mean active participation in the digital world. Digital payments are still restricted to the young, urban, and more educated, underscoring wider socio-economic gaps. Digital public infrastructure is also a key part of remittances, an important economic lifeline for South Asia. 

The World Bank estimates that South Asia will get more than $200 billion in remittances in 2025 and that India will get about $135 billion by 2025, the highest in the world. Similarly, Bangladesh, Pakistan, Nepal, and Sri Lanka are highly dependent on offshore remittances. Interoperable digital payment systems can reduce transaction costs significantly, enabling migrant workers to retain a larger share of their earnings and promoting financial inclusion for recipient households. 

But the promise of DPI should not eclipse its governance problems. Digital identification systems produce vast amounts of personal data, with important implications for privacy, surveillance, consent, and accountability. India’s Digital Personal Data Protection Act is a major regulatory milestone, but the actual implementation is still in its infancy. 

Most South Asian countries still lack comprehensive data protection legislation and independent regulatory bodies to protect privacy rights. With governments moving more and more of their essential services online, strong legislative protections are needed to build public trust. 

Regional Geopolitics and Cybersecurity

Another new challenge is cybersecurity. Data from the Global Cybersecurity Index of the International Telecommunication Union show wide variation in the institutional readiness of South Asian countries. India’s cybersecurity architecture has improved enormously, but other neighboring countries continue to face limitations in technical skills, response to cyber events, and regulatory capacity. As digital identities, health records, welfare databases, and payment systems become more interconnected, problems in one jurisdiction could have consequences across borders. Greater digital connectivity has not translated into greater regional cooperation in cybersecurity. Perhaps the most important obstacle is geopolitics, not technology. 

South Asia remains one of the least institutionalized regions in the world. Differences in the legal frameworks on data localization, cybersecurity, digital taxation, e-commerce, and political difficulties between India and Pakistan continue to impede genuine regional cooperation and efforts at interoperability. 

Unlike the European Union, South Asia lacks common digital governance bodies that can set common rules on data security, digital competition, and cross-border digital services. Thus, digital connectivity may be advancing on a bilateral rather than a regional basis, deepening existing geopolitical divides rather than promoting collective integration. A second strategic dilemma concerns the financing of digital public infrastructure. Investing in fiber-optic networks, cloud infrastructure, data centers, cybersecurity, digital literacy, and institutional capacity are ongoing investments required to build secure digital ecosystems. Asia’s growth demands hundreds of billions of dollars in infrastructure investment every year, and digital infrastructure is increasingly part of that demand, according to the Asian Development Bank. 

Fundamental Test of DPI

In South Asia, digital transformation is often funded by multilateral lenders and overseas technology companies. International cooperation can accelerate adoption, but over-dependence on foreign platforms could also jeopardize technological sovereignty and domestic innovation capacity.

Finally, Digital Public Infrastructure should not be treated as inherently inclusive or exclusionary. Development impact is a function of choices made in governance. DPI can greatly improve public service delivery and regional economic integration, if at the same time, governments engage in affordable internet access, digital literacy, gender inclusion, privacy protection, cybersecurity, and institutional accountability. 

Conversely, if digital infrastructure is deployed without addressing the underlying disparities in connectivity, education, and institutional capacity, it will risk creating a two-speed digital economy where those connected benefit disproportionately, and vulnerable populations are left behind. 

South Asia is at a tipping point in its digital transition. India has shown how digital infrastructure at the population scale can significantly improve financial inclusion and the delivery of public services. Concepts of a similar kind are more and more applied to the own institutional situations of neighboring countries. However, the number of biometric identities issued or digital transactions performed should not be the only performance metric for the region. 

The fundamental test of Digital Public Infrastructure is whether it can reduce, not digitize, exclusion. The challenge is mainly political, not technological; it's the world’s widest digital gender gap for women and the weakest regional economic integration in the world. Digital Public Infrastructure can bridge South Asia, but only if it is built on equity, trust, interoperability, and regional cooperation, not on technological ambition alone.

(The author is a climate researcher and columnist with experience in political research analysis, ESG research and energy policy. She is Member—Women and Inclusivity in Sustainable Energy Research. The views expressed are personal. She can be contacted at anusreetadutta.23@gmail.com )