India’s role in BRICS
BRICS is an acronym for Brazil, Russia, India, China and South Africa – five emerging nations that formed an alliance for economic and social development. The commonality between them is that they are all newly industrialised and aiming for maximum trade and development. Together, BRICS accounts for about 40% of the world’s population and about 30% of the GDP (Gross Domestic Product), making it a critical economic engine. It’s an emerging investment market and global power bloc. And, as the third largest economy in the world, it’s important for India to take its role in the BRICS seriously.
India serves a multifaceted role on the economic, political and social fronts.
Role in trade
The first BRICS summit was held in 2009, in the midst of global recession. Since then, India assumed the role of a trade facilitator in South Asia and Africa owing to its economic strength at that time. In fact, the forum’s analysts called India the best-performing economy in South Asia and an engine of growth in the region.
India has taken several steps to improve trade including proposals for a new inclusive BRICS portal. This is so that the next time any one of the BRICS countries tweaks its import or export licenses, imposes anti-dumping duties or changes the criteria for product registration, the other members are likely to learn about it instantly. It also pitched for an independent BRICS credit rating agency so that members can compare their ranking with members itself instead of other developed countries.
India also promotes intra-BRICS trade, which means urging member nations to import goods from each other instead of Europe. The idea is that intra-trade provides the flexibility of trading in currencies other than the dollar. For example, India and Brazil could trade in Rupee or Lira, whichever suits the deal. By doing this, countries can strengthen their own currency while weakening the US Dollar.
And, when it comes to upping trade and industrial infrastructure, India has contributed over $10 billion to the New Development Bank (the bank of BRICS) to refurbish industrial bases in South Africa and Brazil.
Of course, trade policies and structure is not the only facilitation. The Indian Ocean, being one of the busiest maritime trade routes in the world, is an important region for BRICS. India wants control over this region for two very specific region – first, developing bases in this region would mean faster trade among member nations. And second, the bases will prevent any resources mined here, like the 100 tonnes of natural gas found in 2017, from being taken by other countries like US or Japan. Plus the region is so rumbling with pirates that it’s important to strengthen security here. India intends to join hands with South Africa (since it’s their coastline) to deepen security at shared costs.
As a growth engine for BRICS
In order for BRICS to flourish, each country must first and foremost focus on their own economic development. A strong nation will strengthen the BRICS as a whole. And India? It’s like the growth maker of the BRICS.
From 2001 to 2013, the economic output of BRICS nations rose from $3 billion to $15 billion. Investors saw India, China, and Brazil as a sure thing. But all that soon changed. In the past few years, BRICS has been facing a hard time. The increasing sanctions on Russia, China’s stock market crash in 2015, Indian markets’ bear run in 2014, and the ongoing Brazilian economic crisis, all led investments to flow back to the US.
Of all these, only the Indian market bounced back soon enough to overturn the damage. By 2018, India’s growth rate was highest among the BRICS nations and it convinced investors to reinvest in BRICS. Member nations now look up to India as an aid to faster development.
To begin with, India invested close to $4 billion in South Africa and started the Global Executive Development Programme to train labour force there. It helped Brazil and South Africa replicate it ‘Digitisation of Education’ initiative by providing technological aid to schools there. It also offered to host trade fairs so that members can learn and share innovation. It wants each country to be independently strong so that the burden of strengthening the BRICS doesn’t fall on one or two nations alone. And for this, it provides a brotherly hand.
As a counterbalance to china
China is already the premier economic influencer here, which only makes it easier for it to influence the World Bank. With such power, it can secure political clout to pass projects, which would’ve otherwise been rejected, like the development of the new Silk Road. The purpose of the World Bank is to ensure weaker countries develop faster and reduce their reliance on foreign aid. But the Silk Road refutes this purpose to make China even more economically dominant. The Road will lead to faster spread of terrorism and thwart local business in the countries it passes, due to ease of international trade. These countries will also have to bear the cost of security on the Road, to prevent thefts. This is an added expense for already weaker economies like Afghanistan and Egypt.
India realises this danger and has thus been adamant against the OBOR (one belt, one road) project. Time and again it has made it clear in international forums that the OBOR will threaten development than promote it. In 2018, it skipped China’s Silk Road forum as a gesture of disagreement. Then India and US together announced a plan to construct its own Silk Road, building a highway to Thailand and proposed another north-south corridor with Russia. All of this to counter China’s OBOR initiative.
Another such counterbalancing incident arose when starting the New Development Bank. China urged that each country’s share in the bank should depend on their economic strength. Clearly, more share meant more control for China. India rejected this claim too, demanding an equal share for all five members so that they each had a say in the BRICS summits.
India has also repeatedly used the BRICS to stall several Chinese actions that would have culminated in war. In fact, a week before the 2017 BRICS summit, China withdrew its forces from Dokhlam due to fears of pressure from other member nations. The same thing happened in 2014 too during the LAC border standoff. India used the BRICs card to maintain peace, another role that it happily serves.