BRICS is an acronym for five of the world’s largest developing economies: Brazil, Russia, India, China, and South Africa. Established as a bloc for economic cooperation and political dialogue, BRICS aims to promote mutual development, enhance trade, and provide a counterbalance to Western dominance in global governance and financial institutions.

The BRICS countries represent around 41% of the global population, approximately 24% of the global GDP and around 16% of global trade.

Evolution of BRICS:

The Term ‘BRIC’ was coined by Goldman Sachs economist Jim O’Neil in 2001 in a paper titled “Building Better Global Economic BRICs”. The acronym BRIC comprises four emerging economies, i.e., Brazil, Russia, India, and China. Through this paper, he wanted to highlight the increasing economic power of emerging economies, their strategic importance in the global sphere and their greater influence in global governance.

The idea was picked up by these countries and it eventually developed as a challenge to the US-led economic system of the world.

• In 2006, the foreign ministers of Brazil, Russia, India, and China met for the first time on the sidelines of the United Nations General Assembly (UNGA), marking the beginning of BRIC cooperation.
• Initially, the progress was slow. The first meeting of the BRIC leaders was held in Yekaterinburg, Russia, in June 2009, upgrading BRIC cooperation to the Summit level. They discussed global economic issues and advocated for cooperation to tackle these issues, in the context of the Global financial crisis of 2008.
• In 2011 BRIC was enlarged to BRICS after South Africa officially became a member. This was only the 3^rd summit held in Sanya,
• In 2014, the 6^th BRICS Summit (Fortaleza and Brasilia) signed the most important agreement, i.e., the Agreement on the New Development Bank (NDB) and treaty for the establishment of a BRICS contingent Reserve Arrangement. This was deemed as a challenge for the World Bank and the IMF, which are practically governed by the Western world.
• In 2023, at the 15^th BRICS summit in Johannesburg, six countries (Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE) were invited to join the group from 1 January 2024.

Importance of BRICS for India

India shares close cultural and economic ties with its BRICS nations. India attaches key importance to engagement with BRICS as a platform for cooperation, coordination, and consultation on several issues.

Balancing out Western Dominance:

One of the objectives of the BRICS member countries is to decrease the influence of Western countries on global platforms like the World Bank and IMF. India promotes the multipolar world order, and by being part of the BRICS countries, India has reduced its dependence on Western nations.

For instance, as an alternative to the IMF, CRA provides short-term liquidity support to member nations through currency swaps to mitigate balance of payment crises. Similarly, the NDB can act as an alternative to the World Bank.

New Development Bank (NDB)

New Development Bank is a multilateral development bank aimed at providing development assistance for infrastructure and sustainable development projects in BRICS countries and other emerging countries. It was established in 2015 with its headquarters in Shanghai, China. Its members include Brazil, Russia, India, China, South Africa, Bangladesh, Egypt, and UAE. Membership is open to the members of the United Nations. NDB has the initial authorized capital of $100 billion, divided into 1 million shares with a par value of one hundred thousand dollars each. NDB inaugurated its Indian regional office (IRO) in Gujarat International Finance TecCity (Gift City) to address infrastructure and sustainable development needs in India and Bangladesh.

 

Contingent Reserve arrangement

In 2015, the Contingent Reserve arrangement was established to support member countries facing short-term balance of payment crises and protect against short-term liquidity pressure through mechanisms like Currency Swaps. The proposed BRICS Payment system will act as an alternative to the SWIFT Payment system. It can help in stabilizing their economies and reducing reliance on institutions like the IMF, and resilience of BRICS economies against global shocks.

Other Opportunities provided by BRICS

• Economic Opportunities: BRICS provides big markets for Indian products like IT services, agricultural products, and Pharmaceuticals. In 2022, India recorded over US$100 billion in intra-BRICS trade and has traded with all members.
• Development: Membership in the BRICS has opened avenues for funding projects. For example, The NDB has been benefitting India by funding numerous projects, including the construction of roads and renewable energy plants.
• Energy Security: Brazil and Russia are amongst the most powerful oil-producing countries. As part of the BRICS countries, India has used its membership to secure important power deals and partnerships to help with its energy supply.
• Diplomacy and Geopolitics: BRICS gives India a platform for multilateral diplomacy and geopolitical influence. BRICS provides various opportunities for India to cover topics relating to global issues such as climate change, economic order, terrorism, etc. India can leverage its membership in the BRICS to strengthen its bilateral relations with other nations.
• Science and technology: India has benefited from scientific research with the BRICS countries, collaborating on ICT, healthcare and outer space. Technological advancement in China has created many learning opportunities for India, which has driven economic growth and innovation.
• Reform in Global Governance: India uses the platform of the BRICS to advocate reform in global institutions like the IMF and World Bank to reflect the changing global economic landscape.

Concerns

Changing Geopolitics:

In the changing geopolitics, there are difficulties in managing the relations with all the countries when there is wide divergence.

• Competition to rise as a regional power: India wants a multipolar world order, whereas China wants a Chinese-led Asian Century. China is also competing to rise and dominate the Asian Neighbourhood. These different aims hampers the prospects of cooperation.
• Territorial Issues: China and India have many territorial issues that need to be resolved. For instance, India is opposed to the Belt and Road initiative as it violates its sovereignty.
• Geopolitical rivalry: coordination among members is impacted by geopolitical rivalries and regional conflict among members. For instance, China’s territorial dispute in the South China Sea.
• Lack of coherence and unity: For example, China has taken an anti-West approach since 2017, when the trade war began. India has friendly relations with the West, whereas China and Russia have taken an anti-West stance. Further, BRICS members such as China often oppose India’s seat as a permanent member of the UNSC (United Nations Security Council).

Ideological disputes

• Different Political setups: The BRICS member nations have different political systems and ideologies. For example, India has democracy, but Russia and China do not completely agree with the principles of liberal democracy. It limits the ability of groups to take positions on global issues and build consensus.
• Lacks dispute redressal mechanism: there is no internal mechanism in the forum for redressing disputes among member Nations. Further, the addition of member nations in BRICS may pose a challenge to consensus building.

Practical Problems

• NDB limitation: Compared to other established institutions, such as the World Bank, NDB is limited in resources, lending ability and decision-making capacity.
• Economic inequalities: Due to the economic disparities among members, the benefits of cooperation are not equitably distributed. For instance, South Africa struggles to compete with India and China.
• Geographical distance: the members of BRICS are on different continents, making coordination, trade, etc, difficult.

Way forward

• Broadened Perspective: the member nation of the BRICS must act and openly engage in issues beyond economic debate.
• Internal Redressal: Internal issues among member nations must also be actively looked into within the forum.
• Boost infrastructure connectivity: India should actively collaborate with member nations on infrastructural connectivity to boost regional integration and trade facilitation.
• Widened sectoral engagement: The scope and depth of cooperation should be expanded among member nations in different sectors such as science and technology, health, education, environment, agriculture, disaster management, etc.
• Engagement with multilateral forums: India can coordinate with other BRICS nations on different forums, such as WTO, UN, G20, etc, to promote and protect common interests.

The recent expansion of the BRICS with the admission of new members has increased its global economic and political weight and, according to the Johannesburg Declaration (15th BRICS Summit, 2023), will promote collaboration, solidarity and strategic partnerships in the “Global South” in a spirit of commitment to inclusive multilateralism.