Brics for India: A trade springboard, not an anti-West wall
Summary
- India’s stake in this enlarged grouping is the access to export markets that Iran and other Brics members can help with. Could IMEC take another path? As for de-dollarization, that’s not our aim, though we could well pursue trade in local currencies where it suits our economic interests.
The recent Brics summit in Kazan, Russia, has generated its usual share of criticism and praise. Reactions have ranged from disapproval of such a disparate grouping of nations based on the whimsy of a banker to the outright condemnation that such a diverse bunch should harbour any delusions of meaningful utility.
These views may not be entirely without merit: the summit’s official communique traverses familiar ground, a boilerplate text covering all the important issues of the day, but also implicitly enunciating its anti-West bias and a desire to reduce the dominance of the US dollar in international trade and payment systems.
In the midst of all the censure, especially after Brics was expanded to include new members, founding member India has the delicate task of balancing its growing economic stature with its chosen strategic autonomy.
It is trying to achieve this by locating and consolidating its unique geopolitical position and following it up with the underwriting of domestic economic imperatives through trade and investment routes.
Also read: Mint Quick Edit | All eyes are on the BRICS summit in Russia this week
Much has been written about India’s geopolitical choices; it might be worthwhile to examine if Brics-plus holds any promise for India’s geo-economic aspirations.
Iran is a new member that holds special value for Indian ambitions. Significantly, Prime Minister Narendra Modi made time for a bilateral with newly elected Iranian president Masoud Pezeshkian at Kazan.
India has old civilizational ties with Iran; economically, it is also invested in the Chabahar deep-sea port, apart from being a preferred customer of Iran’s hydrocarbons.
Strategically, and unfortunately, India-Iran ties have to navigate the minefield of Western economic sanctions, thereby limiting the scope of expanding common interests.
But hope springs eternal: Iran could provide an alternative springboard for the planned India-Middle East-Europe Economic Corridor, which purportedly had to be iced after last year’s outbreak of Israel-Palestine hostilities.
In any case, Iran is still the centre-piece for the International North-South Transport Corridor, expected to give South Asia access to Central Asian markets.
India’s reliance on Iran as a launch pad for trade expansion, while simultaneously competing with China’s Belt and Road Initiative within the Brics tent, puts many balls into play and may demand some deft diplomatic moves.
Also read: India-China ties important for peace, stability and development, PM Modi tells President Xi Jinping in Russia’s Kazan
India’s finely crafted geopolitical strategy necessitates a Brics presence without being stridently anti-West, while its deepening ties with the US provide the perfect counterfoil to China’s nascent expansionist tendencies.
But this sharply poised position does not camouflage India’s distaste for the US tendency to weaponize its dollar by imposing unilateral sanctions against sovereign states, even though New Delhi may not be as vocal about it as Beijing or Moscow.
The dollar remains the world’s best accepted currency and de-dollarization is unlikely to happen anytime soon, but India has probably shown the world how it can be achieved gradually through bilateral treaties: its comprehensive economic partnership agreement with the UAE incorporates trade settlement in local currencies.
Admittedly, it is not perfect and expanding this arrangement to other trading partners, or even other Brics members, is fraught with challenges.
Also read: PM Modi holds talks with Iranian President Masoud Pezeshkian in Russia’s Kazan on sidelines of BRICS
One solution would be to expand the Asian Clearing Union, an arrangement for nations to settle payments for intra-regional transactions that is currently languishing with sub-par volumes.
