India first grouped with its BRICS members and sought to find an alternative to the US dollar for cross-border transactions. The Modi-led government then took a U-turn after Trump won the White House and threatened to impose trade tariffs. As the tariff threats grew stronger and Canada, Mexico, and China faced the heat, India slowly backtracked from the de-dollarization agenda. The first move was to protect its economy from tariffs as it could impact the country’s imports and exports sector.
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BRICS: India & the US Dollar
Foreign Minister S. Jaishankar made multiple statements this year citing that India has no plans of advancing the de-dollarization agenda. The U-turn comes after Trump’s threats of tariffs forced them to backtrack on the ideology. Read here to know how India not only rejected de-dollarization but also embraced the US dollar. India contradicted the BRICS bloc’s ideology of ditching the US dollar and fell in line with Trump’s threats.
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However, Thiago Bessimo, a governance researcher at the Hertie School in Berlin says that BRICS member India could be playing a double game with the US dollar. He explained that while India is distancing itself from de-dollarization, it is looking at alternatives to the US dollar behind closed doors.
“Publicly, India distances itself from any initiative that could challenge the US dollar,” Bessimo said. “But behind closed doors, (BRICS members) it explores alternatives that might reduce its reliance on Western financial systems.”
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He added that India is maintaining a balance between BRICS and the US dollar to safeguard its economic prospects. India needs US support as it hosts a major chunk of IT jobs in the country that generates wealth and opportunities. Without the US, India’s economy and its ever-growing GDP could face severe challenges. Therefore, walking on a tightrope and kowtowing to both the US and BRICS is the best solution.
