India’s BRICS balancing act

Why in the News

India is hosting the two day BRICS summit in New Delhi on 12 and 13 September 2026, and treats the grouping as a hedge against the Western economic order rather than a replacement for it. The United States and the European Union remain India’s largest export market and its largest source of investment. The same dependence has become a source of exposure. The United States imposed steep tariffs on India last year amid disagreements in trade deal negotiations, and India’s sovereign decision to purchase Russian oil during the Ukraine war turned it into a target. Tariffs are only the most visible instrument. Patent rules blocked a developing country waiver on vaccines at the height of the Covid-19 pandemic, a widening American sanctions regime has repeatedly halted an Indian port project in Iran, and European environment linked trade measures now act as a barrier to Indian exports. India therefore has to reduce reliance on an order it cannot yet do without.

Why does India treat BRICS as a hedge and not a replacement?

1. The bloc’s weight has grown: The BRICS share of global gross domestic product (GDP) grew from 17% to 35% between 1995 and 2024, surpassing the G7’s share.
2. The West still supplies the markets and the capital: The United States and the European Union continue to be India’s largest export market and its largest source of investments.
3. Western integration built the services sector: Integration with Western economies aided the growth of India’s service sector, which is where most of the new, well paid jobs have been created.
4. What the hedge could deliver, and when: Expansion of south-south trade, the geographic concentration of critical minerals in the BRICS region and growth in alternative development finance such as the BRICS bank could support India’s growth. None of this is a counter-balance to the Western economic order today, and it could reduce India’s reliance a decade on.
5. The stated rationale for the hedge: A former Reserve Bank of India (RBI) governor argues that India should treat the emerging international financial architecture around BRICS and the Asian Infrastructure Investment Bank (AIIB) as a “risk mitigant” and a rational response to an ever-expanding sanctions regime.

What did the TRIPS waiver refusal reveal about patent control?

1. What was asked for: In October 2020, at the height of the Covid-19 pandemic, India and South Africa sought a waiver of certain provisions of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement to help developing nations obtain vaccines and other life saving medicines.
2. What TRIPS is: TRIPS is an international agreement administered by the World Trade Organisation (WTO) that sets minimum standards for protecting intellectual property (IP) in every member country.
3. Who backed the request: India, South Africa and sixty other developing countries pressed for the waiver.
4. What happened to it: The developed countries turned the request down.
5. How the episode is read: A former trade negotiator holds that the failure exposed the danger in an existing patent regime which accords “primacy to patents over patients”.

How large has the Western sanctions regime become?

1. The total and the single largest source: A working paper titled ‘Asphyxiation by Sanctions: Harm, Fear and Smog’, written by a former Reserve Bank of India governor, counts 1,325 sanctions imposed globally since 1949, of which 486 were imposed by the United States.
2. The programmes currently running: The United States currently administers over 30 sanctions programmes, making it responsible for three times as many sanctions as any other country or international body.
3. When the expansion happened: United States led sanctions jumped in recent decades after the collapse of the Soviet Union.
4. The second largest sanctioner: The European Union is the second largest sanctioner after the United States.
5. Trade and financial sanctions grew most: The paper’s decade wise count records financial sanctions rising from 4 in the 1950s to 327 between 2010 and 2022, and trade sanctions from 21 to 209 across the same span.
6. Travel, military and arms restrictions followed: Travel sanctions rose from 8 to 205 over the same period, military aid sanctions from 1 to 62, and arms sanctions from 7 to 67, so the spectrum has widened from trade measures to military ones.
7. The reach now includes the messaging layer: Iran and Russia have been removed from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the secure global messaging network financial institutions use to transmit payment instructions.
8. The label the paper applies: The paper calls the United States the “hegemonic sanctioner”.

What does Chabahar show about sanctions risk to an Indian project?

1. When it started: India’s plan to develop Chabahar Port in Iran began in 2003.
2. The first halt: United States sanctions targeting Iran imposed a “hard break” on progress.
3. The window that opened: The project was revived between 2015 and 2017 after the United States eased sanctions.
4. The window that closed again: India signed a ten year agreement with Iran to operate and develop the port in 2024, and shortly afterwards the United States again warned of sanctions.
5. What the sequence shows: The project’s viability tracked United States policy toward a third country rather than the project’s own economics or India’s own decisions.

Why do BRICS members reject the European Union’s environment linked trade measures?

1. The measures at issue: The European Union has implemented a range of environment linked trade regimes which act as a barrier to India’s export growth.
2. The bloc’s stated position: BRICS nations have “condemned and rejected” the European Union’s Carbon Border Adjustment Mechanism (CBAM) and similar trade curbs, on the ground that they undermine their transition to a cleaner economy.
3. The reading Indian trade experts give it: Indian trade experts hold that a trade and climate linkage through regulations such as CBAM is less about protecting the environment and more about promoting the interests of the developed world.
4. The contrast with the tariff instrument: The United States has been explicit in using tariffs to cut imports from developing nations. The European measure arrives instead as an environmental regulation.

Challenges to India’s BRICS hedge

1. The grouping grants no market access: BRICS is not a free trade area and issues no tariff preference, so membership cannot substitute for the export markets the hedge is meant to make India less dependent on. Eg. India’s tariff reductions have come through bilateral agreements such as the one being concluded with the European Union, not through the bloc.
   The Fix: Negotiate a BRICS tariff preference on a narrow list of goods members already trade heavily in, so the grouping delivers a measurable trade gain rather than a declaration.
2. Alternative development finance is too small to displace anything yet: The financing available through BRICS institutions is a fraction of what India raises from Western markets and from the older multilateral banks. Eg. India’s annual external commercial borrowing exceeds its entire cumulative borrowing from the BRICS bank.
   The Fix: Set a share target for BRICS sourced project finance inside the public capital expenditure plan, so the alternative is used rather than only cited.
3. Mineral concentration is not the same as mineral access: The critical minerals sit inside the BRICS region and their processing capacity sits largely with one member, so geography does not convert into supply security for India. Eg. China accounts for the majority of global rare earth separation and processing capacity.
   The Fix: Tie offtake agreements with Brazil, South Africa and the Gulf members to refining capacity built in India, so the supply arrives in a processable form.
4. A hedge invites the retaliation it is meant to insure against: Visible participation in the bloc has itself drawn tariff threats, so the insurance carries a premium paid in the very relationship being hedged. Eg. Tariff threats were directed at BRICS members over the grouping’s “un-American” policies.
   The Fix: Keep India’s BRICS agenda on development finance, payments efficiency and supply chains, and off currency displacement, so the hedge is defensible as economic policy rather than as alignment.

Conclusion

India’s position is not a choice between two economic orders. It is a dependence on one while building an option on the other. That option is not yet large enough to price, so every instrument the hedge rests on remains smaller than the exposure it is meant to offset. The cost of the hedge is already being paid in the relationship it insures against. What to watch is whether the Delhi declaration commits to anything carrying a number and a date, since a hedge that produces only text leaves the exposure where it was.

Back2Basics: Carbon Border Adjustment Mechanism

1. What it is: CBAM is a European Union measure that charges an importer for the greenhouse gas emissions embedded in certain imported goods, set against the carbon price a European producer of the same good already pays.
2. The goods it covers: It applies to cement, iron and steel, aluminium, fertilisers, electricity and hydrogen, the emission intensive sectors most exposed to import competition.
3. How it is phased: A transitional phase requiring importers only to report embedded emissions ran from October 2023, and the definitive phase charging for those emissions began in 2026.
4. India’s stated objection: India treats it as a unilateral trade barrier inconsistent with the principle of Common But Differentiated Responsibilities, since it charges a developing country producer at a developed country’s carbon price.

Matching Previous Year Question

“[2019, GS2, 15 marks] “The long-sustained image of India as a leader of the oppressed and marginalised Nations has disappeared on account of its new found role in the emerging global order”. Elaborate.”