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The BRICS countries are facing an unprecedented challenge, and India, as a member of the BRICS, is actively taking a series of actions to try to change the landscape within the BRICS organization. Behind all this is a battle between India and Russia over currency settlement.
Russia has been actively promoting local currency settlement, raising the status of the renminbi above the Indian rupee, which has caused dissatisfaction in India. In order to force Russia to abandon the yuan, India has taken a series of measures, including delays in payments, and even reports in the media that the BRICS unified currency is a trap to raise questions about joining the BRICS.
For India, the issue is not just economic, but also political. India believes that China's dominance in the BRICS organization has caused unease, which has been deepened by the process of de-dollarization of the BRICS. India fears that it may be adversely affected in this process.
Although India has taken some measures in terms of currency settlement, the actual effect has been limited. At the same time, a large number of cross-border settlements between China and Russia have shifted to the renminbi and ruble. The reason why Russia prefers the renminbi so much is mainly because the international circulation of the renminbi is relatively high and has been widely recognized by the international community.
In contrast, India has always refused to use RMB payments, partly out of its unwillingness to contribute to the internationalization of the RMB, and partly influenced by its sense of competition and prejudice against China. Russia's demand for the renminbi is much larger than the rupee, especially as the trade volume between China and Russia grows, and Russian imports to China are also increasing, making the renminbi one of the most needed currencies in Russia.
India continues to push for rupee settlement and does not even rule out the possibility of escalating financial sanctions against Russia. This makes cooperation between Russia and India face serious challenges. Although Russia may suffer some losses, India is the second largest buyer for Russia, and the cancellation of cooperation will hit the Russian economy even harder.
Therefore, Russia eagerly seeks to establish a BRICS unified currency in order to find a solution to the Russian-Indian trade problem. China, Russia, Brazil and South Africa all support this idea, but India has not made its position clear. Indian media believe that the current global trade is still dominated by the US dollar, coupled with the tension in Sino-US relations, India cannot take more risks. In addition, India's influence in the BRICS is relatively weak and there are not many goods to export. Therefore, if other countries such as Saudi Arabia and the United Arab Emirates join the BRICS, it may lead to a more unbalanced trade structure in India.
Indian media also pointed out that only China and India have border disputes among the BRICS countries, and India must carefully deal with China-related issues, including the BRICS unified currency. Although China has always stressed that border conflicts should not be the whole of Sino-Indian relations, the Indian media have tried to influence Russia's decision-making through this issue, hoping that Russia will abandon the yuan and continue to use the rupee.
For India's prevarication, Russia is already prepared. The Russian Foreign Ministry said that the BRICS countries are already accelerating the transition to local currency settlement, but the issue of a unified currency remains difficult. This also means that India has only two options, either to accept local currency settlement or to accept a unified currency. The BRICS summit has made the establishment of a common currency an immutable topic, and this decision will have a profound impact on the future cooperation of the BRICS countries.
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