Reserve Bank of India expands digital rupee pilot to two new territories

India just quietly became one of the most aggressive CBDC testing grounds on the planet. The Reserve Bank of India has extended its digital rupee pilot to two additional federally administered territories, pushing programmable welfare payments deeper into the country’s sprawling subsidy system.

The expansion brings Puducherry and Chandigarh into the fold alongside Gujarat, where beneficiaries are already using the e₹ to receive food subsidies. The catch: the digital currency can only be spent on specified goods at designated retailers.

From pilot to platform

The retail digital rupee, known as e₹-R, first launched on December 1, 2022, across four cities: Mumbai, New Delhi, Bengaluru, and Bhubaneswar. What started as a cautious experiment has since ballooned into at least 10 concurrent CBDC pilots during the fiscal year 2025-26, according to the RBI’s latest annual report released in late May 2026.

Retail e₹ circulation currently sits at roughly ₹771 crore, which translates to about $92 million. The programmable features are the real story here. By restricting how and where digital rupees can be spent, the RBI is building infrastructure that could eventually underpin direct benefit transfers across India’s entire subsidy ecosystem. That ecosystem is valued at approximately $80 billion, making it one of the largest government-to-citizen payment networks anywhere in the world.

Plans for further expansion include deploying the digital rupee for farmer income support programs and pension disbursements.

Why programmability matters

Traditional welfare payments in India flow through bank accounts, and once deposited, the government loses visibility into how funds are used. Programmable money changes that equation entirely. The RBI can encode spending rules directly into the currency itself, ensuring food subsidies actually get spent on food.

India’s subsidy system has historically been plagued by leakage, where funds intended for beneficiaries get siphoned off through middlemen, ghost accounts, or outright fraud. A programmable CBDC, at least in theory, eliminates several of those failure points by making the money itself aware of its intended purpose.

The global CBDC race in context

India isn’t operating in a vacuum. China’s digital yuan has been in public testing since 2020 and was showcased during the Beijing Winter Olympics. The European Central Bank is deep into its digital euro preparation phase. Nigeria launched the eNaira in 2021, though adoption has been sluggish at best.

India’s Unified Payments Interface already processes billions of transactions monthly, giving the RBI a proven digital payments backbone to build on. The RBI’s annual report also mentions plans for cross-border transaction capabilities, which would position the digital rupee as a potential settlement tool for international trade.

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