Onkar S Kanwar
As the Indian chapter of the BRICS Business Council prepares to hand over the chairmanship of the council to China in 2017, it is time to reflect upon the progress made over the last one year and the key actionable agenda that needs to be carried forward with full vigour.
The global economic environment is witnessing significant change, which throws up challenges and uncertainties for emerging economies like BRICS and poses a risk to their growth. Enhancing intra-BRICS economic co-operation assumes importance in this very context. A progressive co-operation mechanism amongst BRICS across key economic areas is vital to support the growth and development agenda in each of the countries.
Foremost, there is a need to double the level of intra-BRICS trade from the current level of $242 billion. This should be achievable, given the level of complementarities our economies share. In-fact, we need to widen our trade basket and include more value-added products.
The BRICS Summit and related meetings in Delhi and Goa last year saw several fruitful discussions at the political, academic as well as business levels in a wide range of areas, including energy, agriculture, infrastructure, manufacturing, skill development and financial services. The BRICS Business Council has tabled several proposals in these areas.
One of our key proposals has been the need to evaluate the feasibility of a BRICS Credit Rating Agency, endorsed even in the official declaration issued at the end of the Summit meeting in Goa. The idea of an independent rating agency takes into account the need for a home-grown institution that is the best in quality and also aligns its rating methodology to account for the emerging market business realities. Such an institution will provide a more thorough and complete credit rating analysis of companies and thus facilitate cross–border investors to take a more informed decision while evaluating opportunities in emerging market economies such as BRICS.
A special expert group has been set up under the aegis of the BRICS Business Council to work out the modalities of such an agency based on market principles. Once established, it would be the next big success for the BRICS, the first being the New Development Bank (NDB). NDB has made tremendous progress. Within one year of its establishment, NDB sanctioned loans worth $811 million in sustainable development projects across the five BRICS countries.
The speed of NDB’s progress is an indication of the collective aspirations of BRICS. In a recent statement at the World Economic Forum, K V Kamath, president of the NDB, said that it is working towards doubling lending every year over the next two-three years. This presents huge opportunities for India and other BRICS countries to seek finance for their developmental projects. With NDB’s support, the BRICS co-operation itself will get a boost and can also facilitate integration of regional value chains in manufacturing.
To further the financial assistance towards sustainable development projects, the BRICS Business Council has asked NDB to fix a specific percentage of its resources for funding sustainability projects aligned to the achievement of SDGs in BRICS. It has also asked for NDB’s assistance in unlocking the capital markets potential in BRICS countries for development financing.
BRICS Business Council has also sought support of NDB in creating a BRICS Infrastructure Project Development Facility, which shall aim to provide assistance on the entire gamut of project development expertise including project identification, pre-feasibility, post-feasibility, preparation of DPR and environment and social impact assessment. Through such a platform, projects can be converted from the conceptualisation stage to the bankability stage.
The Council looks forward to meaningful discussions in all these areas at its mid-term meeting as well as in the interactions with NDB officials in the coming months.
The BRICS countries have also developed a framework for BRICS e-commerce co-operation to boost e-commerce development, enhance capacity building and co-operation in developing infrastructure. Such a mechanism can be specifically targeted towards MSMEs. An e-commerce platform can help MSMEs from the countries overcome logistical and geographic challenges for better access to markets. The idea has potential to enhance intra-BRICS trade. Another interesting proposal that is under discussion amongst members of the BRICS Business Council is that of the New International Payment Card System for BRICS, with a view to promote settlements of international transactions in national currencies. The BRICS Business Council has also recommended creation of a BRICS Angels Network, which can help talented young entrepreneurs across BRICS countries to create an eco-system of start-ups, thereby fostering entrepreneurship and promoting innovation among the BRICS economies.
Over the years, the five-member grouping has expanded its agenda for economic cooperation considerably. It is also reshaping the global order and strengthening the global governance architecture through its institution-building capabilities and commitment from its leaders towards co-operation for mutual growth and development. The BRICS nations have not shied from taking bold decisions and implement the same diligently. Amidst the current global economic scenario, new approaches, mechanisms and models would be required to strengthen intra-BRICS co-operation.
The author is chairman, BRICS Business Council, and past president, FICCI