In October 2024, the BRICS Summit in Kazan, Russia, saw significant attention on discussions about a shared currency and reducing reliance on the US dollar. However, behind the scenes, Indian businesses have exhibited caution towards embracing these evolving frameworks. While the Indian government views BRICS as a strategic platform, India's formal business community remains wary due to its established global market ties. This cautious approach highlights concerns over practicality and risks associated with deeper engagement that could disrupt current global economic systems. The larger business community perceives the idea of adopting a shared BRICS currency as both risky and impractical, given logistical challenges and potential disruptions to established trade relationships.
Cautious Optimism: Indian Businesses Navigate BRICS Currency Proposals
In the heart of the vibrant autumn season, as leaders from Brazil, Russia, India, China, and South Africa gathered in Kazan, Russia, for the 2024 BRICS Summit, the proposal of a shared currency took center stage. While the summit aimed to explore new avenues for economic cooperation, Indian businesses were notably reserved. The Indian government sees BRICS as a crucial strategic alliance, yet India Inc., the country's formal business community, has reservations. These businesses thrive on global integration and market diversification, heavily reliant on Western markets for exports and investments. Even Indian startups are cautious about shifting away from established networks that have fueled their growth and access to venture capital.
Ajai Sahai, director general of the Federation of Indian Export Organizations, voiced concerns about the feasibility of BRICS' currency-related proposals. He emphasized that while local currency cooperation may mitigate some trade risks, it lacks the stability and universality provided by the US dollar. Indian corporations depend on the dollar's widespread acceptance, and any abrupt shift toward a new currency would create unnecessary turbulence. Former Reserve Bank of India governor Shaktikanta Das pointed out that BRICS countries lack the policy coherence and geographical unity seen in successful blocs like the Eurozone. This lack of cohesion raises doubts about the practicality of a shared currency.
The New Development Bank, central to BRICS' financial architecture, is often perceived as heavily influenced by Beijing, leading to concerns about unequal resource allocation and Chinese dominance. Tensions between India and China have also cast a shadow over the bloc, with Indian firms wary of political implications that might hinder their interests. Despite these challenges, BRICS offers opportunities in sectors such as energy, infrastructure, and technology. With the inclusion of new members like Saudi Arabia, UAE, and Egypt, India gains deeper access to strategically important regions. However, for these opportunities to be realized, BRICS must focus on non-controversial initiatives rather than idealistic policies like a shared currency.
From a journalist's perspective, this situation underscores the delicate balance Indian businesses must maintain. While engaging with BRICS can open new doors, it requires careful navigation to ensure alignment with global operations and advocate for fair, feasible policies within the bloc. Simultaneously, Indian policymakers must pursue a dual-track strategy, actively participating in BRICS while maintaining strong partnerships with Western markets. This approach allows India to manage its economic interests effectively without disrupting existing global frameworks. In essence, the path forward lies in pragmatic engagement and strategic diplomacy.