What TV doesn't, print can't; we deliver.
What TV doesn't, print can't; we deliver.
The acronym BRIC was coined by James O’Neill of Goldman Sachs in 2001 for the emerging economies of Brazil, Russia, India, and China. It brought out the significance of these countries in the global economic order that also had certain degrees of similarities in their economic trajectory and faced similar challenges. In 2006 on the sidelines of the United Nations General Assembly meeting the foreign ministers of these countries met and formalized the group. The first summit took place in 2009 in the wake of the 2008 global financial crisis. Since then each year the BRICS Summit of Leadership has taken place with a joint statement being released. India is an important member of this bloc having the largest working force, the highest rate of GDP growth, and the second-largest economy.
India has been a strong advocate of reforms in multilateral institutions from the United Nations Security Council (UNSC) and International Monetary Fund (IMF), World Trade Organisation (WTO), reforms in restructuring the ‘UN Development System’, ‘general review of quota system in IMF’ and so on.
In 2009, at Yekaterinburg in Russia, the leaders agreed to reforms in ‘international financial institutions’ to reflect changes in the global economy. This was reiterated in subsequent declarations such as the 2010 Brasilia Declaration, the 2012 Delhi Declaration, and the 2018 Johannesburg Declaration. In 2013, at Durban, the member countries expressed their concerns about the slower rate of reform in the IMF.
In the 2011 declaration at Hainan, member countries agreed to the need for reform in the United Nations Security Council (UNSC). This agreement was reaffirmed in New Delhi in 2012, in 2017 at Xiamen, and in 2020 at Moscow.
In 2019 at Brasilia, member states agreed on the need for reform in the World Trade Organization (WTO), emphasizing the consideration of the interests of all members, including both developing countries and least developed countries. The declaration specified that WTO reform should maintain a ‘central position,’ ‘core values,’ and ‘fundamental principles’ for the benefit of all.
The reforms mentioned above have been raised in the joint statements of the BRICS summit, and there is considerable overlap with what India has advocated since joining these institutions. Thus, BRICS can serve as a valuable platform for India to advance its national interests in the direction of multilateral-level institutional reforms.
Since Russia has been facing sanctions from the West of different natures, there have been several challenges being faced in bilateral trade. The trade of goods and services between Russia and India has encountered difficulties, notably since the Crimean episode in Russia in 2014, which further worsened after the Ukrainian invasion. Similarly, the currency war between the USA and China has also hindered stability in the market, causing India to face certain difficulties.
BRICS countries collectively account for more than 27 trillion USD, constituting 26% of the world’s share. Overcoming the hurdles and bottleneck challenges faced by these countries could lead to a seamless flow of goods and services, promoting financial integration.
The New Development Bank (NDB), established in 2014 at the Fortaleza Declaration with an initial capital of 50 billion USD, has now reached 100 billion USD. The NDB provides funds for infrastructure and other projects related to clean energy, among others. With its regional office in Gujarat, currently, 21 projects are being funded by the NDB.
Launched in 2018, the BRICS Pay platform, which operates independently of previously existing cross-border fund transfer platforms, has begun functioning. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) which is another such platform is costly and slower compared to BRICS Pay and is highly dominated by Western countries. In 2022, some Russian banks were banned from carrying transactions from SWIFT creating hardship. Although India and Russia have managed to resolve such issues by use of Nostro Vostro accounts, the arrival of BRICS pay can make things much easier.
The adoption of BRICS Pay will reduce the dependence of member countries and others on the dollar, marking a step towards de-dollarization. Leading countries in the bloc, especially India, Russia, and China, have been exploring ways to de-dollarize their economies. Apart from providing funds for various projects, the NDB and BRICS Pay can further economic integration for India within the bloc and with other countries globally.
South Africa became a member of the group in 2010 in Sanya, which led to the transformation of BRIC into BRICS. In August 2023 it was announced that six new member states will join the bloc in January 2024. The summit chair revealed that over 40 countries expressed interest in joining the bloc, underscoring its essentiality.
Although BRICS is not a bilateral institution the expansion will introduce new avenues for discussion on issues, creating fresh opportunities for India. The recent inclusion of Egypt, Ethiopia, Iran, Argentina, the United Arab Emirates, and Saudi Arabia in the group will enable India to establish stronger ties. All these countries have great importance for India in unique ways.
Despite Egypt being a strategic partner of India, the connections forged during the Non-Alignment Movement era have diminished. Egypt’s inclusion in BRICS is expected to rejuvenate ties. Iran, also a strategic partner, was the second-largest oil supplier to India till 2010-11 before US-led sanctions, utilizing the BRICS pay platform, will be a good supplier of energy to India. Ethiopia, as the seat of the African Union, will contribute to strengthening India’s ties with Africa as a whole. Argentina, already a strategic partner, will see further strengthening of ties. Saudi Arabia and the UAE both of them are strategic partners of India and hold immense importance.
The addition of these members will add to the outreach of BRICS in a multidimensional way. Strengthening of NDB, raising strong voices for reforms in international institutions, and energy security are a few to mention. Strong ties with the member states will also help to curb the menace of terrorism and bring peace to the region.
BRICS has a very strong geopolitical dimension to it. It has largely been seen as the voice of the Global South. The major markets have now shifted to emerging economies but the decision-making institutions are highly dominated by Western developed economies. India has been the voice of the Global South for a long and strengthening BRICS will be an add-on.
BRICS, based on complex interdependence, a neo-liberal institution has raised similar concerns as India. BRICS thus provides India with huge opportunities to further its national interest and in turn, also benefits from India’s membership to the bloc.
Dr. Vikash Kumar Thakur is a research scholar from the School of International Studies, at Jawaharlal Nehru University and has a specialization in International Relations.
