Focus on Local Currencies, Not a Shared BRICS Currency
India is not actively pursuing the creation of a shared BRICS currency, a concept gaining attention amid global economic tensions. Analysts highlight that while some BRICS nations, particularly China and Russia, have voiced interest in diversifying trade away from the U.S. dollar, India’s approach remains rooted in promoting trade in the Indian rupee.
Challenges to a Shared BRICS Currency
A shared BRICS currency faces significant hurdles, including mistrust and internal differences among the bloc’s members. Analysts in New Delhi underscore that a common currency would disproportionately benefit dominant economies like China, leaving others like India skeptical.
Chintamani Mahapatra, founder of the Kalinga Institute of Indo-Pacific Studies, noted:
“Unlike the European Union, BRICS lacks a common market or trade policy. This diversity makes a unified currency economically unviable.”
India’s Focus on Trade in Local Currencies
Instead of endorsing a BRICS currency, India is enhancing efforts to promote trade in the rupee. Prime Minister Narendra Modi emphasized the importance of local currencies during a BRICS summit in Kazan, Russia, where nations agreed to boost trade settlements in their respective currencies.
India’s foreign trade policy supports using the rupee for international trade, targeting 17 partner countries, including Russia, Malaysia, and Kenya. However, challenges persist. India’s significant trade deficit with Russia, for instance, has left Moscow holding surplus rupees with limited avenues for utilization.
U.S. Response: Trump’s Tariff Threats
Former U.S. President Donald Trump strongly opposed the idea of a BRICS currency, threatening 100% tariffs on goods from BRICS nations if they sought to replace the dollar. While this rhetoric has drawn attention, Indian officials reaffirm that de-dollarization is not part of their strategic or economic agenda.
External Affairs Minister S. Jaishankar clarified:
“We have never actively targeted the dollar. Any shift is driven by practical challenges, such as U.S. sanctions on trade partners like Russia.”
Trade Diversification Over a Common Currency
India continues to diversify trade mechanisms by fostering agreements to use local currencies, but the dominance of the U.S. dollar in global trade remains unchallenged. While BRICS nations collectively explore ways to reduce dollar reliance, India’s approach emphasizes practicality over symbolism.
