BRICS: Increased Relevance for India
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India’s GDP, at 3.89 trillion USD, is forecasted to grow by 7% for the fiscal year 2024-2025. Its major trade partners are the US and China, with China narrowly surpassing the US this year with 118.4 billion USD in trade versus 118.3 billion USD.
Despite the near equal volume of India’s trade with the US and China, India and China have made progress in addressing their political differences recently, with the heads of government meeting at the BRICS summit in Kazan. They smoothed the border disagreements and the projections for further cooperation forecast a growth in economic engagement between the two Asian behemoths.
India, despite its large volume of trade with the west in general and with the US in particular, is invested in hedging its financial bets and opening new horizons through its involvement with BRICS.
As a founding member of the BRICS New Development Bank (NDB), India is increasing its financial resilience through reducing reliance on the dollar, including through supporting the local currencies trade initiatives in the BRICS Kazan declaration.
Relevance of Economic Resilience
BRICS as a bloc represents the largest economic group in the world with 35% of the global GDP, surpassing the G7’s 29.2%.
However, with the USD serving as the global reserve currency and the SWIFT banking systems forming an integral part of global exchanges, members of the bloc have yet to overcome the challenge of dependency.
This issue was one of the items on the agenda at the Kazan summit in October 2024, and is likely to remain in the spotlight. The perceived weaponization of economic and financial sanctions by the US government by most of the global south has spurred the move toward alternatives.
On October 30 2024, the US treasury department released a statement including a list of names and entities that will face sanctions due to their alleged involvement in trade with Russian entities said to be involved with the war in Ukraine. There is considerable overlap between the nationalities on that list and members -and aspiring members- of BRICS.
The Treasury Department’s decision is likely to strengthen the direction toward reducing reliance on the USD among BRICS members, including India; the list of entities sanctioned includes 15 from India. The Indian government’s response to the sanctions decision was that the transactions by the Indian companies were legal per Indian law.
This may spur the Indian government to take additional measures to increase its resilience against such measures.
Economic Sectors
Sectors forecasted to experience significant growth over the short to medium terms include the IT sector, which will likely be boosted by the growing focus on AI development, rising demand for internet connectivity, and expanding IT service needs.
The energy sector will also likely continue to experience growth, boosted by India’s role as energy intermediary between Russia and Europe, as well as its growing demand for energy to fuel its economic growth.
Infrastructure is another sector forecasted to experience growth in the near and medium terms, bolstered by the government’s prioritization of economic growth and smart city development, supporting transport and communication infrastructure development.
Forecast
Looking ahead, India’s strategic balancing between East and West will remain a defining feature of its economic and geopolitical landscape. As it navigates growing economic opportunities within BRICS and the complexities of Western alliances, India's commitment to diversifying its partnerships and strengthening economic resilience will shape its trajectory. With robust GDP growth on the horizon and key sectors poised for expansion, the outlook is positive.