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The expanded BRICS offers India opportunities to assert its global leadership, but it also poses certain geopolitical and geoeconomic challenges.
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Image Source: Daily Sabah
The 15th BRICS Summit, convened in Johannesburg, South Africa, marked a pivotal moment for the grouping’s future. With the inclusion of Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE), the BRICS+ officially came into existence on 1 January 2024. Notably, more than 40 countries from the Global South had expressed their willingness to join, with at least 22 submitting formal applications. However, the acceptance of only the aforementioned five warrants closer examination to understand its implications for the grouping and how it benefits New Delhi’s foreign policy objectives.
In recent years, New Delhi has strived to use multilateral institutions to strengthen its global standing. Be it pioneering the inclusion of the African Union during its G20 Presidency or accepting strategically chosen partner nations from West Asia and Africa into BRICS, this growing aspiration is evident in all its actions. New Delhi views BRICS for what it is today: a geoeconomic framework of emerging economies that swiftly captured the zeitgeist when they came together 15 years ago, but one that has made only modest progress in achieving its goal of renovating and reforming the global financial architecture. For example, over the last decade, the BRICS’ New Development Bank (NDB) has approved loans worth only US$ 33 billion, less than one-third of what the World Bank commits in a year. Even in terms of currency, many members wish to decouple their economies from the US dollar due to the apprehension associated with the Federal Reserve’s policy changes. Many seek alternatives to park their foreign exchange assets following Russia’s exclusion from the SWIFT payment system. However, neither China nor India possess a fully convertible currency, limiting the appeal of the RMB and the INR, respectively.
In recent years, New Delhi has strived to use multilateral institutions to strengthen its global standing. Be it pioneering the inclusion of the African Union during its G20 Presidency or accepting strategically chosen partner nations from West Asia and Africa into BRICS, this growing aspiration is evident in all its actions.
Nevertheless, today, more so than ever before, BRICS is being leveraged by New Delhi as another important mechanism to promote a more multipolar world and advocate for reforms in the global governance framework. If successful, this could mean the expansion of the United Nations Security Council’s permanent members and an alternative model of NDB-led development finance emerging from the Global South. Therefore, while BRICS may have lost some relevance as a geoeconomic framework, it is evolving under the geopolitical ambitions of its member nations, positioning itself to play a more influential role in shaping emerging norms, policies, and institutions.
The Johannesburg BRICS summit garnered international interest rarely seen since the grouping’s formation in 2009, with speculation over the admission of new members. Heads of state and business leaders from almost all 54 African countries participated in the Summit, anticipating Africa-centric positive outcomes. This anticipation was met with invitations extended to two additional African countries, Egypt and Ethiopia, along with Iran, Saudi Arabia, and the United Arab Emirates, to join BRICS as full members.
The Johannesburg BRICS summit garnered international interest rarely seen since the grouping’s formation in 2009, with speculation over the admission of new members. Heads of state and business leaders from almost all 54 African countries participated in the Summit, anticipating Africa-centric positive outcomes.
India’s strategic partnerships with the new members underscore the benefits of their inclusion. Both Egypt and Ethiopia have seen a revival of ties with New Delhi under the Modi government. For instance, Prime Minister Narendra Modi’s visit to Cairo in June 2023, followed by visits from the external affairs minister, defence minister, and military chiefs, was the first of its kind since 1997. India was Egypt’s 5th largest trading partner between April and December 2022, with bilateral trade figures reaching US$ 5.17 billion. Moreover, the admission of Egypt was still unsurprising, as it is the largest economy in North Africa today and had already joined the NDB in February 2023.
However, the backing and inclusion of Ethiopia into the BRICS demonstrate New Delhi’s astute strategic thinking. Amidst the scramble for power in Djibouti and Eritrea (unprecedentedly, in terms of overseas military bases) between the United States (US), France, Japan, China, and Russia, among others, New Delhi has been quietly establishing a partnership with Ethiopia in the increasingly important Horn of Africa region. With its inclusion, India now has partners in both North and East Africa. Interestingly, Ethiopia is also the largest recipient of India’s Lines of Credit in Africa, engendering the development of energy transmission projects, the sugar industry, and railways. India and Ethiopia are also in the final stages of clinching a defence cooperation agreement, which will see New Delhi help the African nation with military training and credit lines to shore up defences. Furthermore, Ethiopia confirmed the discovery of over two billion barrels of oil in January 2023. Thus, untapped natural resources, geostrategic location, and deepening ties highlight the importance and significance of these two countries for New Delhi.
The admission of both Saudi Arabia and Iran into BRICS is also a pivotal achievement but one that can prove to be a significant hurdle, given the regional rivalry and consensus criteria in place for all BRICS policies. However, New Delhi has taken a broader view and pushed for the inclusion of the two nations. Since the last few years, India-Saudi Arabia relations have become robust, with the Kingdom becoming New Delhi’s fourth largest trading partner and a key collaborator in counterterrorism and anti-money laundering efforts. During FY 2022-23, India’s imports from Saudi Arabia reached US$ 42.03 billion and exports to Saudi Arabia were worth US$ 10.72 billion, registering an increase of 22.48 percent over the previous year. The Kingdom alone accounts for 18 percent of India’s energy imports, reflecting its significance for New Delhi’s energy and economic security calculus.
The admission of both Saudi Arabia and Iran into BRICS is also a pivotal achievement but one that can prove to be a significant hurdle, given the regional rivalry and consensus criteria in place for all BRICS policies.
India and Iran have also maintained cordial ties amidst the flux regional environment. On 13 May 2024, India signed a 10-year deal with Iran to operate and develop the strategically important port of Chabahar, investing around US$ 120 million in the port and US$ 250 million in credit to reinforce India’s connectivity to Central Asia, Afghanistan, and the greater Eurasian region. By 2030, India will have the potential to export more than US$ 1 trillion, which will require new robust linkages of connectivity with Greater Eurasia for sustained economic growth and prosperity. The Chabahar Port and its development will thus boost trade between India and Central Asia with a bilateral trade potential of more than US$ 200 billion. While it may have been Beijing which brokered a timely détente between Iran and Saudi Arabia, New Delhi’s backing to have the two nations on board shows its confidence in its respective relationships and materialisation of its recent shift to a multi-alignment foreign policy.
The inclusion of the UAE is also not coincidental. It signed a Comprehensive Economic Partnership Agreement with India in February 2022, ensuring free, open, and non-discriminatory trade between the two countries. It also guarantees greater access for UAE’s exports to the Indian market by reducing or removing tariffs on more than 80 percent of the products traded. Furthermore, the UAE has long maintained a ‘one-foot in both camps’ approach, skilfully balancing its relationships with both Western and Eastern nations. Thus, making the country an attractive partner for New Delhi to have on the BRICS table. It further solidifies the robust bilateral trade and economic relationship between the two countries and brings a level-headed partner to the BRICS table to avoid devolving into an anti-West bloc.
The expansion of BRICS marks a significant milestone in the grouping’s evolution from a geoeconomic framework to a geopolitical force. By admitting Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE, BRICS has solidified its position as a counterweight to Western-dominated global institutions. This move not only strengthens the collective bargaining power of the Global South but also aligns with India’s strategic interests in promoting a multipolar world order. It also underscores its Vishwa Bandhu approach to foreign policy and positions BRICS as a platform for balanced dialogue rather than an anti-Western bloc. However, the expanded BRICS faces significant challenges. Reconciling its members’ diverse interests and priorities will be a formidable task, particularly in areas such as energy transition, environmental concerns, and the admission of new members.
The success of BRICS depends on its ability to translate its geoeconomic and geopolitical potential into tangible outcomes. For India, the expanded BRICS presents both opportunities and challenges. While it offers a platform to assert its global leadership aspirations, New Delhi must be ready to navigate the complex geopolitical and geoeconomic dynamics within the grouping. The careful selection of new members and the skilfully crafted consensus criteria for admission demonstrate New Delhi’s foresight in global affairs.
Aneesh Parnerkar is a Research intern with the Observer Research Foundation.
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Aneesh Parnerkar is a Research intern with the Observer Research Foundation. ...
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