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STRATEGY 7 min read

The India-ASEAN Financial Corridor Is Undervalued

UPI's international expansion, rising trade volumes, and a regulatory environment that's quietly aligning - the corridor is ready.

In 2013, I was sitting in a Jakarta co-working space, helping Indonesian SMEs understand Indian supply chain financing structures. Bilateral trade between India and ASEAN that year was roughly $80 billion. A decade later, it’s crossed $130 billion, and the financial infrastructure connecting these economies has changed in ways that most people haven’t noticed.

Most commentary on emerging market corridors focuses on China-ASEAN or US-ASEAN. The India-ASEAN corridor gets far less attention. That gap between reality and perception is where the opportunity is.

The Infrastructure That Changed

A few structural shifts since 2020 have made this corridor qualitatively different from what it was even five years ago.

Real-time payment interoperability is live. UPI’s linkage with Singapore’s PayNow, operational since February 2023, isn’t just a bilateral convenience - it’s a template. NPCI International Payments Limited (NIPL) has signed MOUs with payment networks in Thailand (PromptPay), Malaysia (DuitNow), and the Philippines (InstaPay). By 2025, a merchant in Bangkok could theoretically receive payments from an Indian tourist’s UPI app in real time. The technical rails exist. This isn’t a whitepaper aspiration.

GIFT City has matured. The Gujarat International Finance Tec-City (GIFT IFSC) now hosts 30+ fund management entities, multiple banking units, and an international exchange. For ASEAN-based capital seeking India exposure - or Indian institutions wanting to structure ASEAN-focused products - it provides a regulatory sandbox that simply didn’t exist three years ago.

And corporate India has made irreversible ASEAN commitments. Tata’s $4.5 billion investment in a lithium-ion battery plant in Gujarat serves its ASEAN supply chain. Reliance Jio’s digital platform ambitions extend to Southeast Asia. Mahindra’s acquisition of SsangYong feeds its ASEAN distribution. These aren’t exploratory moves. They’re structural capital flows that need financial services infrastructure to support them.

The Connectivity Stack

The financial corridor isn’t a single pipe. It’s a layered stack, and understanding which layer is most mature (and which has the most headroom) matters a lot for positioning.

graph TB
    subgraph Layer4["Capital Markets & Investment Flows"]
        CM1[Cross-listed ETFs]
        CM2[GIFT City Fund Structures]
        CM3[FII/FDI Channels]
    end

    subgraph Layer3["Trade Finance & Supply Chain"]
        TF1[LC/BG Digitization]
        TF2[Supply Chain Financing]
        TF3[MSME Credit Bridges]
    end

    subgraph Layer2["Regulatory Harmonization"]
        RH1[Bilateral MoUs - RBI/MAS/OJK]
        RH2[AML/CFT Alignment]
        RH3[Data Localization Frameworks]
    end

    subgraph Layer1["Payment Rails"]
        PR1[UPI-PayNow Live Link]
        PR2[UPI-PromptPay Pipeline]
        PR3[RuPay Card Acceptance]
    end

    Layer1 --> Layer2
    Layer2 --> Layer3
    Layer3 --> Layer4

    style Layer1 fill:#e8f5e9,stroke:#2e7d32
    style Layer2 fill:#e3f2fd,stroke:#1565c0
    style Layer3 fill:#fff3e0,stroke:#ef6c00
    style Layer4 fill:#fce4ec,stroke:#c62828

Layer 1 (Payment Rails) is the most mature - real-time, cross-border, low-cost. Layer 4 (Capital Markets) has the most headroom and the highest complexity. The people and institutions that can operate across multiple layers at once will do disproportionately well.

The Corridors Aren’t Interchangeable

Each major bilateral corridor has its own financial logic, and conflating them leads to generic strategies that don’t really work anywhere.

India-Singapore: Wealth and Fintech

Singapore is India’s second-largest source of FDI (~$16 billion in FY2023-24) and the primary conduit for Indian capital flowing into Southeast Asia. The logic here is wealth structuring and fintech infrastructure.

Singapore-based family offices managing Indian HNI wealth have grown from roughly 200 in 2020 to over 1,100 by late 2024. Indian fintech companies - Razorpay, Pine Labs, Groww - have established Singapore entities for ASEAN expansion. The financial services opportunity sits in cross-border wealth advisory, regulatory work (MAS and RBI frameworks), and technology licensing structures.

From my time advising on cross-border transactions: the single biggest friction point isn’t technology or regulation. It’s the absence of people who genuinely understand both regulatory environments. A compliance officer who can read an MAS Technology Risk Management guideline and an RBI Master Direction on IT Governance with equal fluency is worth their weight in gold. There just aren’t many of them.

India-Indonesia: Digital Banking and MSME Finance

Indonesia’s financial inclusion trajectory looks a lot like India’s did from 2015-2020: large unbanked population, rapid smartphone penetration, regulatory willingness to experiment. Bilateral trade reached $38.8 billion in FY2023-24, heavily concentrated in commodities (palm oil, coal) and manufactured goods.

The logic here is digital banking infrastructure and MSME credit. Indonesia’s OJK (Financial Services Authority) has been studying India’s account aggregator framework and the JAM stack. Indonesian digital banks like Bank Jago and Bank Neo Commerce are building systems that Indian banks built five years ago.

The opportunity is in technology transfer - not code, but institutional knowledge. How did Indian banks handle KYC at scale? How did the account aggregator framework work through data privacy concerns while still enabling credit access? I’ve heard these questions come up repeatedly from Indonesian financial institutions.

India-Vietnam: Manufacturing Finance

Vietnam has emerged as the primary beneficiary of supply chain diversification from China. India-Vietnam bilateral trade has grown to $14.8 billion, and Indian manufacturers - particularly in electronics, pharmaceuticals, and textiles - are setting up Vietnamese operations.

The logic here is manufacturing supply chain finance. Vietnamese banks are relatively underdeveloped in structured trade finance products, and that’s an opening. Indian banks with strong trade finance desks - Axis Bank, ICICI Bank, State Bank of India - could extend their supply chain financing products to Indian manufacturers operating in Vietnam. The challenge is regulatory: Vietnam’s State Bank (SBV) licensing requirements for foreign bank branches are stringent. But representative offices can still facilitate significant business.

Some Numbers Worth Looking At

A few data points that frame the scale:

These aren’t speculative projections. They’re current flows looking for better infrastructure.

What This Means for People in Finance

I’ve seen this pattern before - a corridor that’s structurally ready but under-covered by talent. When I was working out of Jakarta in 2013, finding an Indian banker who understood Indonesian regulatory nuances (or an Indonesian compliance professional comfortable with RBI frameworks) was nearly impossible. That gap was an arbitrage opportunity for anyone positioned at the intersection.

The same dynamic is playing out now, at a larger scale and across more sophisticated products.

Cross-border compliance expertise. As UPI expands internationally, someone has to manage the AML/CFT obligations across jurisdictions. The RBI’s Liberalised Remittance Scheme (LRS) intersects with MAS’s payment services licensing in non-obvious ways. Anyone who can map these intersections creates immediate value.

Trade finance digitization. India’s trade finance workflows still involve substantial manual documentation. ASEAN trade finance is, in many corridors, even more paper-heavy. The institutions that digitize these workflows - smart contract-based LCs, digital warehouse receipts, blockchain-verified bills of lading - will capture margin from current paper-based processes.

Wealth structuring across jurisdictions. Indian HNI wealth is flowing to Singapore and ASEAN real estate, and the demand for advisors who understand India’s tax treaty network (DTAA provisions with Singapore, Thailand, Malaysia) alongside local investment regulations is growing faster than the supply of people who can actually do this work.

How I Think About Corridor Assessment

When I look at any bilateral financial corridor, I ask four questions:

  1. Can money actually move? Real time, low cost, with regulatory clarity.
  2. Are regulators cooperating or building walls? Active cooperation versus parallel isolation.
  3. Are there corporate anchor tenants? Major corporations making irreversible capital commitments that demand financial services.
  4. Is there a talent pool? People who can operate across both regulatory environments.

For India-ASEAN right now: question 1, yes (UPI international is real). Question 2, improving (MOUs are proliferating, GIFT City provides a meeting point). Question 3, yes (Tata, Reliance, Mahindra, Adani all have ASEAN strategies). Question 4 is the bottleneck. And bottlenecks in talent markets tend to be opportunities for individuals.

The Timing Question

Corridors don’t develop linearly. They have inflection points where infrastructure, regulation, and commercial intent line up at the same time. The India-Singapore corridor hit its inflection around 2019-2020. India-Indonesia is approaching that point now. India-Vietnam is maybe 2-3 years away.

The people and institutions positioning themselves across these corridors today - building regulatory knowledge, relationship networks, operational playbooks - will be the ones capturing value when each corridor accelerates.

Why is this corridor undervalued? Not because the data is hidden. It’s because the opportunity sits at the intersection of payments, trade finance, wealth management, and regulatory compliance - things that are typically siloed in large organizations. The value is in connecting them.

Strategy
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