Since Jim O’Neill coined the phrase BRIC back in 2001, the grouping has come a long way, from being formalised in 2009 to the incorporation of South Africa.
Since Jim O’Neill coined the phrase BRIC back in 2001, the grouping has come a long way, from being formalised in 2009 to the incorporation of South Africa. Today, Brics (Brazil, Russia, India, China and South Africa) is a formidable economic and political force. The high economic growth of the economies and the natural demographic dividend are signs that a structural edge relative to the rest of the world rests with the Brics. In 2015, Brics countries accounted for a total nominal GDP of $16.92 trillion, equivalent to 23.1% of world GDP. Their territories are home to 3.073 billion inhabitants (53.4% of the population). In 2015, they accounted for 19.1% share in world exports. Between 2006 and 2015, intra-Brics trade increased 163%, from $93 to $244 billion.
India will host the eighth annual Summit of Brics from October 15—16 in Goa in its capacity as chair of the influential bloc. India assumed chairmanship from Russia on February 15 and it will last till December 31, 2016. This year the summit is unique as it can also be called as the Brics-BIMSTEC summit. The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is an international organisation involving a group of countries in South Asia and South-east Asia.
These are: Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal. Besides, Brics has tended to become more Asia-centric as leaders of Afghanistan and Maldives have also been invited. India’s core-theme will be building responsive, inclusive and collective solutions for the grouping.
According to the ministry of external affairs, India will adopt a five-pronged approach during its chairmanship. It will comprise institution building, implementation, integration, innovation, and continuity with consolidation (IIIIC or I4C). It’s emphasis would be on institution building, implementation of previous commitments flowing from the past summits, and exploring synergies among the existing mechanisms. The grouping has been pushing for greater economic growth among the member countries and reform of global financial institutions. It has set up a New Development Bank headquartered in Shanghai, with India’s KV Kamath serving as its chief. Will India be successful in getting a few concrete outcomes from the summit and ensure that the grouping remains intact? Only time will tell.
In recent times India, certainly, has been the only bright spot in the grouping. It is the fastest growing emerging economy in the world performing even better than China. Holding the chairmanship of the Brics provides India with a wonderful opportunity to drive its own agenda of getting more investments for its priority projects, especially, in the infrastructure sector from and also discuss trade curbs. India is expected to propose the setting up of a mechanism to resolve issues relating to non-tariff barriers hurting goods trade between the member countries and also seek cooperation on standards and technical regulations in goods and services trade.
Further, India is hoping for a visa pact in the current summit and recommend business visa liberalisation, which would allow businessmen multiple-entry business visas for extended period. India is also in favour of close coordination between the AIIB and the NDB for closer cooperation so benefits can accrue from both the institutions. An important aspect of the summit this year would also be the strengthening of the Brics-G20 relationship on global governance.
The BRICS summit has its focus on innovation, inclusiveness and institution building and innovation and inclusiveness, which have been overlapping goals for both the G20 and the Brics. This would further enhance cooperation in global governance with focus on the developing countries in an innovative and sustainable manner. With MoU’s on cooperation in science, technology and innovation and with the NDB funding green energy projects, the gains to India from the grouping as a whole and the summit in particular are significant.
However, India needs to tread with caution and avoid all controversial issues that could lead to friction. It would be best if the issue of South China Sea is not discussed, though China would seek support for the same from its fellow members. Similarly, India should not bring up the issue of non-support by China for India becoming a member of the nuclear suppliers group. But it would in India’s favour to discuss the issue of India’s growing trade deficit with its major trading partners including China and seek for a gradual solution to the same with efforts from both the sides to ensure that trade takes place is a fair manner.
In recent times, the idea of a broken Brics has also been discussed. With the economies of Russia and Brazil in doldrums because of the crash in oil and commodity prices and both China and South Africa in the midst of major domestic turmoil, India with an expected growth of nearly 8% this fiscal and becoming the world’s most favoured destination for FDI is certainly a outlier in the group. Undoubtedly, the cooperation could be limited by the slowdown in these economies, but the opportunities for India being a member of the group are far more enormous than staying out of it. The utility of the organisation for India’s strategic and economic interests is immense. At the same time, India-China relations could come in the way of Brics functionality. China’s consistent efforts to establish its status as a premier regional power increases the risk of divergence and friction on various issues. The rationale of India to use the Brics to raise its international stature would be ineffective as long as the disparity between the Indian and Chinese economies exists and their interests don’t converge. It would be best for India to use the summit to showcase India and try to get some outcomes favoring increased investment in India and committed funds for India’s infrastructure development without expecting too much.
India should also by way of the summit seek to strengthen the existing multilateral and bilateral relations between the nations and working towards increasing the competitiveness and economic growth of the Brics economies so that the partnership remains intact. Given that the world is beset with political challenges, safety related challenges, and economic challenges forums like these could help in bringing countries together and coordinating on challenges confronting the world economy.
The author is researcher, Brookings India, New Delhi. Views are personal