International Relations Opinion

BRICS nations have initiated discussions on alternatives to the US dollar in global trade.

March 1, 2025
News24Daily

The BRICS initiative to explore alternatives to the US dollar in global trade reflects a
shift towards multipolarity in the global financial system. This development
presents both opportunities and challenges for India’s foreign policy.

Opportunities for India

  1. Enhanced Strategic Autonomy:
    Reducing reliance on the dollar aligns with India’s vision of a multipolar
    world, enhancing its ability to pursue independent foreign policy objectives.
  2. Economic Benefits:
    Trade in local currencies can mitigate risks from dollar volatility, reducing
    import costs, particularly for crude oil and defense purchases.
    It supports India’s focus on de-dollarizing trade with key partners, fostering
    greater financial stability.
  3. Regional and Global Influence:
    Collaboration with BRICS strengthens India’s voice in shaping global
    financial governance.
    It offers India an opportunity to advance the Internationalization of the Indian
    Rupee (INR) and strengthen its economic footprint.
  4. Diversification of Trade Mechanisms:
    Promoting alternatives like a BRICS common currency or trade in local
    currencies reduces dependency on Western-dominated financial systems
    like SWIFT.

Challenges for India

  1. Geopolitical Balancing:
    Aligning with anti-dollar efforts risks straining relations with the US, a key
    strategic partner.
    Balancing ties with both BRICS nations and Western allies is critical.
  2. Economic Preparedness:
    India’s trade deficit with China could deepen if a BRICS currency or yuanbased trade gains prominence.
    Transitioning from dollar-based trade systems demands significant
    institutional and infrastructural adjustments.
  3. Global Resistance:
    Efforts to reduce dollar dominance may face pushback from dollar-centric
    global financial institutions like the IMF and World Bank.
  4. Intra-BRICS Divergences:
    Disparate economic interests and political differences within BRICS,
    particularly with China, may complicate consensus-building.

For India, the BRICS initiative to reduce dollar dependence offers a unique opportunity
to assert leadership in reshaping global trade mechanisms. However, careful
diplomacy is essential to navigate the geopolitical complexities and balance economic
interests while safeguarding its strategic partnerships