Digital Financial Infrastructure and MSME Integration into Global Value Chains: Evidence from India’s UPI Ecosystem

Under the Make in India and Atmanirbhar Bharat initiatives, the country is striving to help its MSMEs find their place in Global Value Chains. 30% of India’s GDP and 45-50% of its total exports are generated by MSMEs. But they have big problems that are built into the system, like not being able to get credit, high transaction costs, and not being able to see the market well. This paper looks at how India’s Digital Public Infrastructure (DPI), especially the Unified Payments Interface (UPI) ecosystem, can help people get involved in GVC. Using data from 2020 to 2026, the study shows that UPI-driven financial formalisation makes a digital trail that can be verified and takes the place of traditional collateral. This makes it 35–50% easier for micro-enterprises to get credit. The study goes into more detail about how UPI is growing into international corridors, like the UPI-PayNow link with Singapore, which has cut trade settlement and remittance costs from 13% to less than 3%. The study says that India is creating a “resilient efficiency” model by combining new digital rails like the Open Network for Digital Commerce (ONDC), the BharatTradeNet unified portal, and the 2026 Digital Trade Facilitation Bill. This model lets MSMEs go beyond local limits and become important parts of global production networks. Legislative reforms recognizing electronic trade documents as legally binding facilitate a shift toward high-tech, value-added manufacturing. The results show that by 2025, 90% of MSMEs will use digital tools. However, Tier-2 and Tier-3 cities still have a lot of problems with digital literacy. The paper ends with suggestions for making the ecosystem better for everyone to participate in, such as subsidies for green technology and standards that are the same all over the world.