BRICS Virtual Summit

General Studies Paper-2

Context

• Recently, a virtual BRICS Summit was held against the backdrop of increasing global concerns over U.S tariff tussle.
  • The summit was called by Brazil amid the 50% tariffs imposed by the U.S on both India and Brazil.

India’s Stand During the Summit

• India strongly believes that the international trading system’s foundational principles of non-discriminatory and rules-based norms must be protected and that there is a need to create more resilient and reliable supply chains.
• Constructive and cooperative approaches are needed by the world to promote sustainable trade.

About BRICS

• BRICS is an acronym that refers to a group of five major emergingnational economies: Brazil, Russia, India, China, and South Africa.
  • Egypt, Ethiopia, Iran, Indonesia, Saudi Arabia, and the United Arab Emirates have joined BRICS as new full members.
• The term BRIC was originally coined by economist Jim O’Neill in 2001.
• Origin: As a formal grouping, BRIC started after the meeting of the Leaders of Russia, India and China in St. Petersburg on the margins of the G8 Outreach Summit in 2006.
  • The grouping was formalized during the 1st meeting of BRIC Foreign Ministers on the margins of UNGA in New York in 2006.
  • Initially, the grouping was termed BRIC as South Africa was inducted in 2010 and from there on it has been referred to as BRICS.
• Summits: The grouping have met annually at formal summits since 2009.
  • Each country takes a one-year chairmanship to set priorities and host a summit. The bloc relies on consensus-based decision-making.
• BRICS brings around 49.5 % of the global population, around 40% of the global GDP and around 26% of global trade.
• BRICS countries have come together to deliberate on important issues under the three pillars of:
  • political and security,
  • economic and financial and
  • cultural and people-to-people exchanges.
• New Development Bank: Formerly referred to as the BRICS Development Bank, is a multilateral development bank established by the BRICS states.
  • The Bank shall support public or private projects through loans, guarantees, equity participation and other financial instruments.

Increasing Relevance of BRICS

• Alternative to Western Blocs: BRICS countries seek to build an alternative to the dominance of the Western viewpoint in major multilateral groupings, such as the World Bank, the Group of Seven (G7), and the UN Security Council.
• Represents growing economic and demographic heft: The eleven BRICS countries now comprise more than a quarter of the global economy and almost half of the world’s population.
  • The group is poised to exert influence over the wars in the Gaza Strip and Ukraine.
• Advocate for Greater Global Representation: BRICS seeks to establish a united front of emerging economy perspectives in multilateral institutions.
  • The group aims both to push for reform of existing institutions, such as expanding the UN Security Council, and to form negotiating blocs within those institutions.
• Coordinate Economic Policy: The 2008 global recession hit the BRICS countries hard, leading the group to emphasize economic coordination on issues such as tariff policy, export restrictions of critical resources, and investment.
• Reduce reliance on the U.S. dollar: BRICS leaders have long advocated for de-dollarization in favor of increased trade in local currencies or even a potential common BRICS currency.
• Create an Alternative Finance System: The group’s New Development Bank (NDB) and Contingent Reserve Arrangement (CRA) are meant to be an alternative lending institution that can strengthen South-South cooperation and reduce dependence on traditional funding sources.

Significance of BRICS for India

• Platform for Strategic Autonomy: BRICS offers India a non-Western multilateral platform to engage with global powers without aligning exclusively with any bloc.
• Enhanced Global Influence through a Larger Bloc: With BRICS now representing almost half the world’s population and including key oil producers, India benefits from being part of a more influential economic and political grouping.
• Championing Global South: India positions itself as a leading voice of the Global South within BRICS.
  • BRICS’ claim as a representative of developing countries, aligning with India’s push for a more equitable world order.
• Strategic Engagement with the Middle East: Inclusion of Saudi Arabia, Iran, UAE, and Egypt provides India with new diplomatic and economic avenues in the Middle East, a region vital for: Energy security, Diaspora welfare and Maritime security and investment cooperation.
• Push for Multilateral Reform: A larger BRICS enhances the push for UNSC reform, where India seeks a permanent seat.
• Counterbalance to China’s Dominance: A broader membership may dilute China’s dominance within BRICS.
  • India can build coalitions with new members to promote balanced agendas and prevent unilateralism.

Challenges

• Internal Geopolitical Tensions: India–China border disputes strain bilateral trust.
• Asymmetry in Power and Influence: China’s economic dominance creates imbalance in decision-making.
• Lack of Cohesive Vision: BRICS lacks a unified ideology or strategic coherence beyond broad themes like multilateralism and development.
  • Members pursue divergent national interests, limiting collective action.
• Institutional Limitations: BRICS has no permanent secretariat, making coordination ad hoc and dependent on rotating presidencies.
  • Limited enforcement mechanisms reduce implementation of summit declarations and commitments.
• Economic Disparities: Members are at different stages of economic development and face unique challenges, it creates difficulty in setting common economic goals or trade policies.
• Expansion-related Challenges: The inclusion of new members adds diversity but also increases coordination complexity and risks diluting the original focus.

Way Ahead

• Deepen Intra-BRICS Economic Integration: Simplify trade logistics among member states to offset disruptions from external protectionism.
• Explore regional payment mechanisms as alternatives to SWIFT ((Society for Worldwide Interbank Financial Telecommunication), as advocated in earlier summits.
• Diversify Trade Partnerships: Develop alternate markets and supply chains—particularly within the Global South—to reduce economic dependency on the U.S.
  • Prioritize South–South cooperation across sectors like energy, technology, and agriculture.