India Backs Trading in Local Currencies for Stronger Economic Cooperation in BRICS

At BRICS 2024 Summit, Prime Minister Narendra Modi said India welcomes efforts to increase financial integration among the member countries.

New Delhi: Prime Minister Modi on Wednesday backed trading in local currencies and smooth cross-border payments in BRICS summit.

In his remarks at the open plenary of the 16th BRICS summit, PM Modi, said, "We welcome efforts to increase financial integration among BRICS countries. Trade in local currencies and smooth cross-border payments will strengthen our economic cooperation".

He noted that the Unified Payments Interface (UPI) developed by India is a huge success story and has been adopted in many countries. "Last year, together with His Highness Sheikh Mohamed, it was launched in the UAE as well. We can also cooperate with other BRICS countries in this area", added PM Modi.

The concept of trading in local currencies within BRICS gained traction around 2013, when discussions about reducing reliance on the US dollar began to intensify. Various agreements and initiatives have been developed since then, with countries like China and India leading efforts to promote local currency transactions. Formal mechanisms, such as currency swap agreements, have also been established to facilitate this kind of trade among BRICS nations.

Trading in local currencies within the BRICS countries (Brazil, Russia, India, China, and South Africa) refers to the practice of conducting trade and financial transactions using the national currencies of these countries instead of relying on a dominant currency like the US dollar.

This approach aims to reduce dependency on the dollar, lower transaction costs, and enhance economic cooperation among BRICS nations. It can involve bilateral agreements to settle payments in local currencies, fostering greater trade and investment within the bloc. The initiative is part of a broader strategy to strengthen economic ties and improve financial stability among these emerging economies.

Further, PM Modi said that BRICS accounts for 40 per cent of the world’s humanity and about 30 per cent of the global economy.

"In the last nearly two decades, BRICS has achieved many milestones. I am confident that in the times to come, this organisation will emerge as a more effective medium to face global challenges", he added

India also conveyed warm greetings to Dilma Rousseff, President of the New Development Bank and highlighted that in the last ten years, this bank has emerged as an important option for the development needs of the countries of the Global South.

"The opening of GIFT or Gujarat International Finance Tech City in India as well as regional centres in Africa and Russia has boosted the activities of this bank. And, development projects worth about USD 35 billion have been sanctioned. NDB should continue to work on the basis of the demand driven principle. And, while expanding the bank, ensuring long-term financial sustainability, healthy credit rating and market access should remain a priority', said PM Modi at the BRICS summit.

BRICS has emerged as an economy of more than USD 30 trillion dollars. The BRICS Business Council and the BRICS Women Business Alliance have played a special role in increasing the economic cooperation.

This year, the consensus reached within BRICS on WTO reforms, trade facilitation in Agriculture, resilient supply chains, e-commerce and Special Economic Zones will strengthen the economic cooperation.

PM Modi said that amidst all these initiatives, there is a need to also focus on the interests of small and medium scale industries.

India is also set to launch the BRICS Startup Forum proposed during India's presidency in 2021 will be launched this year.

The Railway Research Network initiative taken by India is also playing an important role in increasing logistics and supply chain connectivity among BRICS countries. This year, the consensus reached by BRICS countries, in collaboration with UNIDO, to prepare a skilled work force for Industry 4.0 is quite significant.

The BRICS Vaccine R&D Centre launched in 2022 is helping increase health security in all the countries.