India cannot trade in its own currency, the rupee, as it
is not acceptable to others. BRICS system is for the purpose of
allowing members to conduct bilateral trade outside the US$ and in their
own currencies in a much cheaper and faster way instead of roundabout
conversion to US$ and back, not to talk about the loss on exchange in
conversion. Moreover, such trade will be outside the control of the USA,
if done outside the purview of the US$. De-dollarization is the prime
motive of creating BRICS.
India can only trade with other
countries using the US$, as the rupee is not widely accepted, and this
is I think the stumbling block that cannot be resolved. Even Russia does
not want to accept the Indian rupee for energy and weapon sales.
India's export to Russia is not large and Russia does not want to
accumulate too many rupees lying idle without being able to recycle
them. Moreover, the Indian rupee has devalued much over the years.
China
is different, as its trade with Russia is much bigger, with China's
payments for energy and food in Yuan that could be utilized by Russia to
pay back for consumer products like construction equipment, computers,
EVs and smartphones, as two-way trade is expanding.
It was a big mistake for BRICS to get caught by overlooking this important issue when bringing India into the bloc.
Anonymous
PS. I need to push this out earlier as I have a similar piece that I would be putting out soon. Holding it back for too long already.
1 comment:
India's beef with China in BRICS is basically about wanting to internationalize its rupee. Likewise, India's beef with Russia is also about the rupee that Russia does not want as payment for energy and weapons. But India cannot do without cheap Russian energy. Cheap energy is the lifeblood of industrialization. India is caught between a rock and a hard place, trying to strike a hard bargain in BRICS.
The problem is that India's trade with most countries around the world and particularly the Global South, is still not on the level of China's. China's trade, especially its exports to the rest of the world is exponential. China dominates in many export sectors, which India is not able to compare. Remember that China is now the factory of the world, churning out consumer products that the world needed. Countries need to buy cheap consumer products from China and will accept the Yuan as payments for example in energy sales to China, which could be recycled when buying consumer products from China.
For India to rise to the level of China, which it is aiming to do, there is a lot of work to be done. China did not become such a manufacturing giant without long thinking and planning. China started its manufacturing mindset with procuring all the raw materials, trained all the engineers and scientist, tailored its education system to be a manufacturing hub and is able to do it without all the hindrances inherent in its system. This is one positive aspect of socialism, where decisions can be made fast and decisive.
India is hindered by, ironically, its democratic ideals, which hindered progress.
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