BRICS, De-dollarization, and India's Rise

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BRICS' Actions for De-dollarisation and the Role of India

The global financial landscape is undergoing a significant shift, with the growing influence of the BRICS nations—Brazil, Russia, India, China, and South Africa. A key agenda for this bloc is de-dollarisation, a move aimed at reducing reliance on the US dollar as the world's primary reserve and trade currency. This initiative is a response to geopolitical tensions, economic sanctions, and a desire for greater financial sovereignty.

BRICS’s Collective Push for De-dollarisation

The BRICS nations are exploring several avenues to challenge the dollar’s dominance:

  • Trade in Local Currencies: A central strategy is promoting bilateral trade settlements in their respective national currencies. This reduces the need to convert currency to and from US dollars, lowering transaction costs and currency risk.

  • Alternative Payment Systems: The bloc is working on developing and expanding alternatives to Western-dominated payment systems like SWIFT. The BRICS Pay initiative, for instance, aims to create a shared payment infrastructure that would facilitate transactions among member countries.

  • A New Reserve Currency: Discussions are ongoing about the possibility of creating a new, shared reserve currency backed by a basket of BRICS members’ currencies or commodities. This would provide a viable alternative to the US dollar for international reserves.

  • Expanding Membership: The recent inclusion of new members like Saudi Arabia, UAE, Egypt, Iran, and Ethiopia strengthens the bloc's economic weight and extends its de-dollarisation agenda to major energy producers and emerging economies.

The Role of India

India plays a crucial and multifaceted role in this movement. While actively pursuing de-dollarisation, India’s approach is pragmatic, balancing its strategic interests with global economic realities.

  • Rupee-based Trade: India has been at the forefront of establishing rupee-based trade mechanisms with various countries, including Russia and the UAE. This allows India to settle trade deficits and surpluses without using the US dollar, which is particularly beneficial in a volatile geopolitical environment.

  • Digital Currency and UPI: India's Unified Payments Interface (UPI) has become a global model for fast, secure, and low-cost digital payments. India is actively promoting UPI for cross-border transactions, and many countries are exploring its adoption. This could significantly reduce reliance on dollar-centric systems for international retail and remittances.

  • Strategic Balancing Act: India’s role is not about outright rejecting the dollar but about creating a multi-polar financial system. India maintains strong economic ties with Western nations and recognizes the stability the dollar provides in certain sectors. Therefore, its actions are aimed at creating an alternative rather than a replacement, ensuring that its economic security is not tied to a single currency.

  • Leadership in the Global South: As a leader of the Global South, India's push for de-dollarisation resonates with many developing nations seeking to reduce their financial vulnerability. India's efforts to champion a more equitable and diversified global financial system strengthens the BRICS bloc's overall position.



In conclusion, the de-dollarisation drive by BRICS is a long-term strategic move to reshape the global economic order. India's pragmatic and forward-thinking approach, centered on promoting the rupee and leveraging its digital payment infrastructure, places it as a key player in this significant global financial evolution.

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