WHY IS BRICS EMERGING AS AN ENGINE OF GLOBAL GROWTH AND WHY IS IT IMPORTANT FOR INDIA?

Why In News?

The World Bank and International Monetary Fund (IMF) confirm that the expanded BRICS+ bloc has already surpassed the G7 in total economic output when measured by purchasing power parity (PPP).

What is BRICS

BRICS is an intergovernmental grouping bringing together major emerging market economies to promote South-South cooperation, reform global governance, and foster multipolar economic coordination.

Evolution from BRIC to BRICS

Acronym Coined (2001): Economist Jim O'Neill coined the term "BRIC" in a Goldman Sachs research paper to describe the four fast-growing economies (Brazil, Russia, India, China) that would dominate global growth.

BRIC Formation (2009): The leaders of Brazil, Russia, India, and China held their first formal summit in Yekaterinburg, Russia, in 2009, calling for a more democratic and representative international financial architecture.

Inclusion of South Africa (2011): South Africa joined the bloc at the Sanya Summit in China in 2011, transforming "BRIC" into "BRICS" and adding African representation.

Expansion (2024): At the 15th Summit in Johannesburg (2023), Egypt, Ethiopia, Iran, and the United Arab Emirates (UAE), joined as full members.

Partner Country Framework: Adopted at the 2024 Kazan Summit in Russia, creating a structured tier of "Partner Countries" for nations seeking closer institutional association without immediate full membership.

Indonesia's Entry (2025): Indonesia formally completed accession in 2025, adding Southeast Asia's largest economy and expanding the group's demographic and maritime heft.

Strategic Significance of BRICS

What are the Major Areas of BRICS Cooperation?

Trade, Finance & Investment: Promoting intra-BRICS investment treaties, customs simplification, and de-risking trade through local currency settlement mechanisms.

Critical Infrastructure & Connectivity: Developing trans-continental corridors like the International North-South Transport Corridor (INSTC) and maritime logistics hubs.

Science, Technology & Digital Economy: Establishing the BRICS Technology Transfer Centre Network, satellite constellation sharing, and AI governance frameworks.

Energy Security & Clean Transition: Balancing fossil fuel supply security with joint investments in green hydrogen, solar parks, and bio-energy under the BRICS Energy Research Cooperation Platform.

Agriculture & Food Security: Operating the BRICS Agricultural Research Platform (hosted by India) and the Basic Food Security Network to stabilize global grain and fertilizer supply chains.

Health & Pandemic Preparedness: Expanding the BRICS Vaccine R&D Centre for joint clinical trials and affordable generic drug manufacturing.

Climate Action & Just Transition: Demanding adequate, non-debt-creating climate finance from developed nations while promoting common carbon accounting frameworks.

Education, Skilling & People-to-People Ties: Strengthening the BRICS Network University, TVET (Technical and Vocational Education and Training) cooperation, and sports/cultural youth forums.

Why is BRICS Called an Engine of Global Growth?

Rapidly Growing Emerging Markets: BRICS houses the fastest-growing major economies (India at 6.5–7.0% and Southeast Asian/Middle Eastern members growing above global averages), outperforming stagnant advanced economies. (Source: IMF)

Expanding Middle-Class Consumer Demand: Expanding urbanization and rising purchasing power in India, China, Indonesia, and Brazil create unprecedented markets for electronics, automobiles, pharmaceuticals, and services.

Dominance in Global Manufacturing & Industrial Supply Chains: The bloc represents the core of global manufacturing capacity, mineral refining (lithium, rare earths, cobalt), and agricultural commodity production (soy, wheat, sugar).

Massive Infrastructure Spending: Large-scale public capital investments in high-speed railways, renewable energy grids, smart cities, and port infrastructure multiply domestic and cross-border economic activity.

Resilient South-South Trade Networks: Trade among Global South nations is expanding at twice the pace of North-South trade, creating self-sustaining regional economic ecosystems.

Significance of BRICS for the Global South

Amplifying Developing World Voice: Provides a counter-platform to the G7, ensuring that the development priorities of non-Western nations cannot be marginalized.

Democratising Global Financial Governance: Advocate long-overdue quota and voting-share reforms at the International Monetary Fund (IMF) and the World Bank, where developed nations hold disproportionate veto powers.

Development Finance without Policy Conditionalities: Offers borrowing nations alternative financing through the New Development Bank (NDB) without demanding structural adjustment programs or social spending cuts.

Food and Fertilizer Security: Shields developing countries from unilateral sanctions, export curbs, and supply disruptions by creating direct South-South trading channels.

Advancing Climate Justice: Holds the Global North accountable for historical carbon emissions while demanding predictable transfer of technology and annual climate finance under the Paris Agreement.

Why is BRICS Important for India?

What are the Major Challenges before BRICS?

Internal Strategic Divergences & Geopolitical Rivalries: Deep-seated competition between India and China (border disputes, Indian Ocean influence) and differing views on relations with the West (India favors multi-alignment; Russia and Iran view BRICS through an anti-Western prism).

Asymmetric Economic Dominance: China accounts for over 60% of the total GDP of the expanded BRICS bloc, generating fears among smaller members of economic hegemony and skewed trade balances.

Unequal Economic Structures & Macro Volatility: Combining commodity-exporting economies (Russia, Brazil) with commodity-importing manufacturing/services powerhouses (India, China) creates divergent currency and inflation pressures.

Limited Intra-BRICS Trade Integration: Intra-bloc trade remains below 20% of total member trade, constrained by high non-tariff barriers, logistics bottlenecks, and lack of comprehensive free trade pacts.

Absence of a Permanent Secretariat & Binding Treaty: BRICS remains a consultative forum operating on annual rotating presidencies without a treaty-based dispute resolution mechanism.

Currency Convertibility & Payment Hurdles: Implementing a common currency or alternative payment rail faces technical and macroeconomic barriers due to non-convertibility of currencies like the Yuan and Rupee.

What BRICS can Learn from Domestic and International Successful Models?

ASEAN's Consensus-Driven Decision Architecture: Adopting ASEAN's "Treaty of Amity and Cooperation" model where bilateral political disputes are compartmentalized to ensure uninterrupted economic and functional cooperation.

European Union's SEPA (Single Euro Payments Area): Learning from the EU's cross-border payment integration to establish standardized, low-cost multi-currency settlement rails across BRICS central banks without requiring a single common currency.

India's Domestic DPI Model (Unified Payments Interface - UPI): Replicating India's open-API digital payment architecture across BRICS economies to link cross-border retail remittances and trade invoicing directly.

China-Brazil Local Currency Bilateral Mechanism: Adopting bilateral trade clearinghouses using domestic currencies with central bank currency swap backstops to eliminate dollar-hedging transaction costs.

Way Forward

Deepen Intra-BRICS Trade and Tariff Rationalisation: Reduce non-tariff barriers, harmonize customs documentation, and negotiate sectoral trade facilitation pacts to elevate intra-bloc trade beyond 25% of total commerce.

Scale Local Currency and Cross-Border Digital Payments: Interconnect national fast-payment systems (such as UPI, Pix, Mir) and expand New Development Bank local-currency bond issuances to reduce reliance on third-party reserve currencies.

Institutionalise Supply Chain Resilience & Value Addition: Build joint manufacturing clusters in Africa and Latin America for local processing of critical minerals (lithium, copper, nickel) rather than exporting raw ores.

Maintain Strategic Non-Alignment and Inclusivity: Ensure BRICS remains a consensus-driven developmental forum representing Global South aspirations, resisting attempts to convert it into a polarized anti-Western front.

Strengthen Track-II and Academic Exchanges: Expand the BRICS Academic Forum, Think Tank Council, and youth scholarships to build long-term social capital and mutual trust among citizens.

Conclusion

BRICS has evolved into an indispensable engine of global economic rebalancing, offering India a strategic platform to champion Global South leadership, safeguard strategic autonomy, and drive reformed multilateralism.

Source: INDIANEXPRESS