India’s digital ecosystem has changed dramatically over the past decade. Today, people can verify their identity online, make instant payments, access official documents digitally, and use financial services without depending on physical paperwork.
A major force behind this transformation is India Stack, a set of digital public infrastructure and open APIs that supports identity, payments, documents, and consent-based data sharing at scale.
However, the ecosystem has moved far beyond its early foundations. With UPI expanding globally, DigiLocker growing, ONDC enabling open digital commerce, and artificial intelligence becoming part of India’s digital infrastructure strategy, the next phase is already taking shape.
In this blog, we look at what India Stack is, how it has evolved, what India Stack 2.0 means, and how AI could influence its future.
What Is India Stack?
India Stack is a collection of digital infrastructure and APIs that enables governments, banks, businesses, fintech companies, and developers to create digital services at population scale.
Instead of every organisation building separate systems for basic digital functions, India Stack provides common infrastructure that different services can use.
Its core capabilities include:
- Digital identity: Aadhaar-based authentication and verification
- Paperless services: DigiLocker and eSign
- Digital payments: UPI and related payment infrastructure
- Consent-based data sharing: Frameworks that allow individuals to share information securely and with permission
Together, these capabilities have made digital onboarding, payments, documentation, and access to financial services significantly easier.
How India Stack Changed Digital Payments
One of the biggest successes of India Stack is the growth of the Unified Payments Interface, or UPI.
UPI allows people to send money instantly from one bank account to another using mobile apps. It also lets users make payments across different banks and payment apps without being limited to one platform.
Since 2017, UPI has grown rapidly. In FY 2025–26, it processed more than 24,162 crore transactions worth around ₹314 lakh crore.
UPI has also expanded beyond India. This shows how India’s digital payment system can support simple and connected payment experiences in other countries as well.
India Stack Has Grown Beyond Payments
UPI is an important part of India Stack, but India’s digital ecosystem now includes much more than payments. DigiLocker allows people to store, access, and share important documents online. By July 2026, it had more than 72 crore registered users.
Another important development is the Open Network for Digital Commerce (ONDC). It connects buyers, sellers, and service providers across different platforms instead of keeping them within one online marketplace.
India is also building systems that allow people to control how their data is shared with banks and other financial services.
Together, these developments show how India Stack is becoming a more connected digital system for payments, documents, commerce, and data sharing.
What Is India Stack 2.0?
India Stack 2.0 refers to the next stage of India’s digital growth. It is not the official name of a single government programme, but a way to describe how India Stack is expanding.
The first phase focused on digital identity, payments, documents, and secure data sharing. The next phase is moving into areas such as open digital commerce, better use of data, digital records, and artificial intelligence.
The aim is to help different digital systems work better together and make it easier for governments and businesses to create new digital services.
AI is expected to play an important role in this next phase.
AI and the Next Phase of India Stack
If Aadhaar created an identity layer and UPI created a payment layer, AI could add an intelligence layer to India’s digital ecosystem.
The Government of India approved the IndiaAI Mission with an outlay of ₹10,371.92 crore over five years. Its focus includes shared computing infrastructure, indigenous foundation models, datasets, AI applications, skills, startup financing, and safe and trusted AI.
By 2026, India had expanded shared AI compute capacity to more than 45,000 GPUs, while multiple indigenous foundation-model proposals had been selected.
Another important development is AIKosh, a national platform designed to provide access to AI-ready datasets, models, toolkits, and other resources.
These developments could make advanced AI capabilities more accessible to startups, researchers, enterprises, and public institutions.
How AI Could Work With India’s Digital Infrastructure
The opportunity is not simply about creating more AI models. The stronger possibility lies in connecting AI capabilities with existing digital infrastructure.
AI could support:
- multilingual digital experiences.
- smarter fraud and risk detection.
- automated document processing.
- personalised financial services.
- faster customer support.
- improved data analysis and decision-making.
For financial services in particular, AI combined with interoperable infrastructure could help organisations identify unusual transaction patterns, automate processes, improve risk decisions, and create more contextual customer experiences.
However, greater use of AI also increases the importance of privacy, cybersecurity, transparency, bias management, and responsible data use. Therefore, the IndiaAI Mission also includes a Safe & Trusted AI pillar focused on responsible AI development.
How Phi Supports India’s Evolving Payment Ecosystem
As India Stack continues to grow, businesses need payment systems that can keep up with new technologies and changing customer needs.
Phi Commerce helps banks, merchants, and enterprises manage complex payment journeys through a unified payment platform. By supporting issuing, acquiring, and payment acceptance, Phi helps businesses build simpler, connected, and scalable payment experiences for India’s growing digital economy.
FAQs:
What is India Stack?
India Stack is a set of digital public infrastructure and APIs that supports digital identity, payments, paperless services, and consent-based data sharing. It enables governments and businesses to build digital services using common, interoperable infrastructure.
What is India Stack 2.0?
India Stack 2.0 broadly describes the next evolution of India’s digital public infrastructure. It builds on identity, payments, documents, and consent while expanding into areas such as open commerce, advanced data infrastructure, and artificial intelligence.
How is AI connected to India Stack?
AI can complement India’s existing digital infrastructure by supporting automation, multilingual services, fraud detection, data analysis, and smarter digital experiences. Initiatives such as the IndiaAI Mission, AIKosh, and indigenous AI models are helping build this capability.
What role does UPI play in India Stack?
UPI provides interoperable infrastructure for instant bank-to-bank digital payments. It is one of the most successful examples of India’s digital public infrastructure and allows banks and payment applications to participate within a connected payments ecosystem.
Why is India Stack important for businesses?
India Stack can help businesses simplify identity verification, payments, digital documentation, onboarding, and data sharing. As the ecosystem evolves, businesses may also gain opportunities to combine these digital rails with AI-powered services and automation.
