GenEI Blog Series
- Author: Samrat Banerjee
Disclaimer: The views expressed in this paper are those of the authors and do not necessarily reflect the views of their affiliated institutions. The authors write in their personal capacity.
Introduction
India and Europe stand at a pivotal moment in their bilateral relationship. European Commission President Ursula von der Leyen called the recently-concluded Free Trade Agreement (FTA) between the EU and India the “mother of all deals”, as both sides delivered on their commitment to conclude an ambitious FTA decades in the making. Technology is a key element of this agreement.
India’s digital journey from promise to scale has been impressive. One example lies in financial technology, in the form of the Unified Payments Interface (UPI). UPI is an instant payment system developed by the National Payments Corporation of India (NPCI), which allows real-time money transfers between bank accounts using a mobile app, processing 185.8 billion transactions in FY25. This success stems from the so-called India Stack, a vertically integrated digital supply chain that is entirely made in India. This “stack” runs identity verification through Aadhaar (a 12-digit unique identity number), seamless payments via UPI, and secure data sharing through Account Aggregators. UPI’s contribution to banking inclusion has been pivotal, as India has managed to lift formal banking inclusion from 25% in 2008 to over 80% by 2023.
Now, Europe is pursuing a similar journey: the EuroStack is an industrial policy framework that integrates technology, finance, and supply chains to develop 100% “Made in Europe” products. To realise this project, an estimated €300 billion in investments is necessary. This article examines how the India Stack offers practical lessons for the EuroStack, particularly in balancing innovation with the kinds of stringent privacy frameworks found in the EU, such as the General Data Protection Regulation (GDPR). By fostering collaboration, both regions can enhance mutual prosperity and address challenges from ageing populations to economic resilience.
The India–Europe relationship in 2025
The relationship between India and Europe has evolved considerably from colonial exploitation to a partnership increasingly defined by mutual necessity. India’s stable political governance and continuous infrastructure improvements have transformed it into a major economy. The FTA between the United Kingdom (UK) and India increased the urgency for the EU to finalise its own deal with New Delhi, as EU businesses risked losing market access in the world’s fastest-growing major economy. Though it is too early to tell, it certainly looks as if the EU has secured more concessions from India in its own trade deal, and consolidated its position as a dependable trading partner.
Meanwhile, Europe grapples with considerable challenges. Technologically, Europe remains heavily reliant on non-European cloud providers and Artificial Intelligence (AI) ecosystems, exposing Europe’s critical industries to supply chain disruptions, geopolitical pressures, and external regulatory dependencies. Former Italian Prime Ministers Enrico Letta and Mario Draghi have repeatedly warned about a crisis of economic competitiveness for the continent. A partnership with India could help reverse this trend, something that the EU has clearly taken to heart.
India’s burgeoning middle class and technological know-how complement Europe’s R&D prowess and world-class educational institutions. The FTA managed to sidestep certain obstacles, but challenges will likely persist, such as protectionist concerns and India’s objections to EU rules relating to the environment, including border carbon taxes on steel, aluminium, and cement. But the two sides have a shared interest in diversifying supply chains and reducing dependencies on other major powers, which creates compelling incentives for deeper collaboration. Finally, for its part, India has kept a balanced stance in the contest for geopolitical power, opting for strategic autonomy and signalling to the Global South the importance of supply chain sovereignty.
What Europe can learn from India
Since 2009, India has operated the world’s most successful Digital Public Infrastructure (DPI), while Europe’s tech growth has stalled due to protectionist anxieties and extensive regulations. The contrast is stark: India’s Aadhaar system now provides 1.38 billion individuals with biometric identity verification, while Europe’s fragmented eID systems languish across 27 Member States. India’s UPI processed 185.8 billion transactions in FY25, becoming the world’s largest payment network by volume and handling approximately 49% of all real-time digital payments globally. Meanwhile, sending funds across Europe is still considerably harder due to fragmented banking systems and investment frameworks across Member States.
A 2019 Bank of International Settlements (BIS) study noted that India achieved in one decade what ordinarily requires five: ensuring that 80% of adults have access to a bank account. The Aadhaar Enabled Payment System delivers government subsidies and salaries directly to the financially underserved with minimal leakage. During COVID-19, India’s CoWIN platform managed over 2 billion vaccine doses nationwide, a logistical feat unimaginable in Europe’s fragmented digital landscape.
India’s success stems from an open, interoperable architecture. In contrast, the 2025 EuroStack report proposes €300 billion in spending, which is roughly €667 per citizen to achieve what India accomplished at a fraction of the cost. Labour costs and legal compliance can send expenses through the roof. The report, commissioned by Bertelsmann Stiftung (Bertelsmann Foundation) and launched by UCL’s Institute for Innovation and Public Purpose, acknowledges uncomfortable truths, chief amongst them that 80% of Europe’s digital technologies are imported; 70% of foundational AI models originate in the United States, and European companies contribute just 7% of global software research spending. Yet rather than adopting India’s proven open-architecture model, Europe has doubled down on protectionism and closed models. Europeans are proposing a Buy European Act and semiconductor targets, while European tech firms struggle to move innovations beyond research stages.
The push for techno-economic competitiveness in Europe has yielded mixed results. The Draghi report served as yet another wake-up call for European policymakers, who have thus far responded in an inadequate manner. The AI Action Summit in Paris, multilateral discussions, and countless working groups produce documentation, whilst India continues to make strides in DPI.
But Europe has made progress in digitalisation as well. Europe’s European Digital Identity Wallet and Data Governance Act aim for interoperability, but without centralised financial instruments or political will to challenge Member State silos, these initiatives risk the fate of previous legislation. The uncertain geopolitical situation – particularly the straining of transatlantic relations – adds a sense of urgency that Europe seems incapable of meeting. The lesson India offers is inconvenient for Brussels: adoption trumps regulation, and open standards are the fastest way to adoption.
India managed to build a DPI that works for 1.5 billion people by accepting imperfections. Europe studies how to build systems that might work for 450 million if all conditions align perfectly. Until European policymakers abandon their instinct to regulate first and build later, the EuroStack will remain an aspirational project.
But it is not too late. India can assist the EU in its efforts and offer lessons through cooperation and knowledge sharing, and Europe must take this partnership seriously. Cooperation in DPI is an opportunity to expand market access to hundreds of millions of Indian internet users, as well as a chance for supply chain diversification away from China.
Real political will and trust between Brussels and New Delhi will be needed to move this partnership forward. Sustained technical cooperation frameworks, building on the February 2025 visit and the implementation of the “mother of all deals”, will be key. It is critical that the Trade and Technology Council (TTC) remains a meaningful forum for dealmaking. Moving from rhetoric to operational collaboration will determine whether the two blocs can extend this partnership to other areas.
Ways forward: policy recommendations for Europe
Harmonise European Digital Identity through layered consent mechanisms: Aadhaar’s biometric model provides universal identity coverage exceeding one billion residents across all socioeconomic strata through interoperable systems. In Europe, however, fragmentation across the 27 Member States has led to an uneven European Digital Identity Wallet. European governments should adopt India’s centralised layered consent model, providing an opt-in option for sensitive data, while maintaining a baseline universal identifier to harmonise identity services without compromising privacy standards.
Integrate UPI-like open tech architecture into European payment systems: India’s UPI processes nearly 50% of global instant payments through open, interoperable APIs, thus reducing transaction costs. The lack of a Banking Union leads to adoption gaps for the SEPA Credit Transfer, creating additional costs for the transfer of funds across borders. Europe could adopt structures like not-for-profit consortia between private and public actors, which prevents monopolistic concentration while ensuring interoperability.
Adapt Account Aggregator models: Account Aggregators enable user-controlled data portability through techno-legal frameworks across financial, health, and education sectors without permanent intermediary access; in turn, non-reversible sharing mechanisms reduce fraud. Europe has the opportunity to implement consent-based architecture for data spaces by amending existing regulatory frameworks. While preserving core GDPR protections, namely Article 20, the Commission should adopt privacy-first standards over proprietary silos that allow for data portability.
Ways forward: policy recommendations for Europe and India
Interoperability pilots: New Delhi and the European Central Bank should coordinate joint pilot programmes between UPI and existing European payment system initiatives to facilitate diaspora remittances and test regulatory alignments.
Capacity building programmes in the Global South: India has expertise in low-literacy, limited-infrastructure contexts, while Europe’s regulatory rigour to navigate population-scale implementation challenges is unmatched. The two sides could expand pilot programmes to the Global South. Agreeing on standards for these pilots, they could bring financial technology to billions worldwide.
Establish clarity on data localisation: The GDPR’s strict cross-border transfer requirements differ from India’s open design architecture. The blocs need legal harmonisation as a vehicle to facilitate structured debate on data localisation, privacy standards, and architectures, thereby establishing global benchmarks. The implementation of the EU–India FTA or the Trade and Technology Council (TTC) are an excellent opportunity to do so.
Integration with trade and investment: The TTC provides an existing framework for linking development cooperation with commercial partnerships. European firms implementing projects in India should be encouraged to form joint ventures with Indian companies, creating win-win scenarios where European businesses gain market access while contributing to development outcomes. The February 2025 textile projects and trilateral cooperation frameworks explicitly incorporate this approach, with implementation by partnerships between European and Indian organisations.
Samrat Banerjee is a digital transformation adviser with GIZ, specialising in sustainable urban development and data-driven innovation. With a background in computer science and over seven years in international development cooperation, he works at the intersection of technology and public policy. Samrat also volunteers with iSPIRT as a public technologist, contributing to India’s Digital Public Infrastructure initiatives and their global narrative.
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