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BRICS 2023: Expansion of Membership, De-dollarisation and Implications for India; An Analysis

Updated: Sep 1, 2023

By Sruthi Sadhasivam and R Madhumitha

Image Courtesy: Reuters

Article 27/2023

An Introduction: 2023 BRICS Summit

The 15th BRICS summit was hosted under the theme—"BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development and Inclusive Multilateralism." The BRICS nations constitute 41% of the global population, 24% of the world’s GDP, and undertakes 16% of the world’s trade (Karthikeyan, 2023).

BRICS States & Trends towards De-Dollarisation ?

The last few years have been testing times for the United States Dollar (USD). Recognized as a global reserve currency for decades, frequent trade wars and sanctions have made countries a bit wary of the USD. The US domestic economic condition does not help as well. It is in this context efforts have been made to bring in an alternate global currency. There are reports that suggest that Brazil, Russia, India, China and South Africa (BRICS) are in the forefront of this movement.

BRICS is certainly not light-weight as they produce more than 30% of global GDP. Analysts point out that trade among these countries with an alternate currency can pose a significant threat to the USD.

The de-dollarization move was also given a brisk impetus when the recent BRICS meet invited Saudi Arabia, UAE and a few more countries to join the consortium. Oil trade in non-dollar denominated currencies would certainly help BRICS. The recent example of India oil’s purchase from Russia with Rupee illustrated how beneficial it would be for the country. With the big oil exporters joining the extended BRICS it is expected to have consequences for the domination of USD.

The de-dollarisation move has some major challenges. Some of them are related to geo-politics, like the security interests of India and China. But as Joseph W Sullivan pointed out in an article in Foreign Policy an alternative to USD in the form of a BRICS currency could result in cooperation between countries like India and China in ‘a well-defined area where interests align’.

India remains wary of a BRICS currency and has stated that it never was a point of discussion. Even last month the Indian Foreign Minister was very categorical when he stated “there is no idea of a BRICS currency. Currencies will remain a national issue for a long time to come.’

India’s bilateral engagements at the sidelines of the BRICS Summit

India held bilateral meetings with Ethiopia, Iran, Senegal and Mozambique on the sidelines of the BRICS Summit.

In the meeting with Ethiopia's prime minister, Abiy Ahmed, prime minister Modi and the latter agreed to boost their trade, defense and people to people relations (The Economic Times, 2023).

Indian Prime Minister Narendra Modi and Iranian President Seyyed Ebrahim Raisi decided to fast track infrastructure cooperation, including the Chabahar port project. They reflected on their bilateral cooperation in terms of trade and investment, energy, connectivity, and counter-terrorism (The Economic Times, 2023).

Senegal’s president, Macky Sall and prime minister Modi discussed ways to promote trade & investment, defence & security, energy, mining, agriculture, pharmaceuticals, railways, capacity building, culture and people to people ties between the two countries.

Prime minister Modi and president of Mozambique, Filipe Nyusi discussed various ways to diversify the areas of cooperation between both the states (The Times of India, 2023).

What does BRICS entail for India?

In the BRICS 2023 summit, the BRICS nations decided to expand its membership to include six countries namely Argentina, Ethiopia, Iran, Saudi Arabia, Egypt and the United Arab Emirates; they're expected to become full members from January 1. The 6 new countries that have joined are of great value to India. For instance, India is the second-largest trading partner for Ethiopia and the latter is geo-strategically situated at the horn of Africa. In 2023, India upgraded its relations with Argentina and Egypt to strategic partnership. Saudi Arabia and UAE are islamic countries that have previously extended support to India in defending India’s territorial integrity and sovereignty by regarding the J & K issue as an internal matter of India, ignoring Pakistan’s efforts in internationalizing the issue (Pradhan, 2023).

India has played a key role in the BRICS forum in terms of upholding food security and combating health related challenges. For instance, India proposed the BRICS Agriculture Research Platform (BRICS-ARP) (Purushothaman, 2019), “a global platform for science-led agriculture which seeks to address the issues of world hunger, undernutrition, poverty and inequality by promoting sustainable agricultural development through strategic cooperation in agriculture and allied sector” (Ministry of Agriculture & Farmers Welfare, 2021). This initiative of India was not only agreed by all member states but was also operationalised in 2021.

The BRICS alliance proposed that they have a BRICS currency for making international trade payments. However, India’s External Affairs Minister, S. Jaishankar said that India has no plans for a BRICS currency and would focus on strengthening its Rupee (Deshpande, 2023). Moreover, the trends towards de-dollarization have not yet materialized, there are high possibilities that this would turn out as a product of geopolitical calculations and as a temporary measure adopted by countries to de-risk themselves from US sanctions.

The National Development Bank (NDB) has been facing certain structural issues (Porto & Donnellon, 2023). For instance, amidst the Russia-Ukraine war, the NDB’s quest for foreign funds was obstructed as it depended heavily on external financing and capital from the bank’s members (Porto & Donnellon, 2023).

India can however make use of the inclusion of new countries in the forum, as they are growing economies. These countries represent a major chunk of the Global South which forms the growing economies of the world and India has a platform to engage directly with these nations through the forum especially with the US China trade war intensifying and the world economy facing the stumble. The new member countries also represent a part of the oil producing countries. (Hindustan Times, 2023).

According to Bloomberg economists, “The original BRIC members had two things in common: large economies, and high potential growth rates. The expanded BRICS-11 is a less coherent group — some are going through crises, others are thriving. This could signal an expansion of the agenda beyond economics"

Modi-Xi Meet during BRICS Summit: No progress in talks on Sino-India Border

India’s prime minister, Modi interacted with China’s president, Xi Jinping on the sidelines of BRICS summit. During that conversation, Prime minister Modi clearly stated that maintenance of peace and tranquility in the border areas and observance and respect for LAC is pertinent for normalization of the relationship (Parashar, 2023). Despite India’s clear expression of pre-requisites to engaging with China, immediately after the BRICS summit, China comes up with a map indicating Arunachal Pradesh and Aksai Chin as its territory (Krishnan, 2023). With the release of the map by China with its baseless territorial claims, India strongly expressed its condemnation over the same, dismissing the map as absurd. In fact, the two states disagreed with the very format of discussion at the BRICS summit— while China wanted a more structured bilateral meeting, India preferred to have only an informal conversation (Srinivasan, 2023). Both the states have had several corps commander level talks, have discussed about the border situation during the Bali summit and in other forums but to no avail, the relations between both the states remain tense especially with regards to agreeing on matters relating to the border.

The lack of political will and China’s unconventional warfare approach to border management manifested frequently in its baseless cartographic endeavours indicates that Sino-Indian border dispute is bound to continue regardless of the meetings (at the forthcoming G20 summit) that both seek to participate in future.

(Sruthi Sadhasivam and R Madhumitha are Research Officer at C3S. The views expressed in this article are those of the author and does not reflect the views of C3S.)


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(Sruthi Sadhasivam and R Madhumitha are Research Officers at C3S. The views expressed in this article are those of the author and does not reflect the views of C3S.)

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