|Demand of the question
Introduction. Contextual Introduction.
Body. Discuss the need and significance of strengthening intra-BRICS trade for Indian economy. Suggest measures to boost Indian trade with other BRICS countries.
Conclusion. Way forward.
Recently there has been a rise in trade disputes, protectionism and unilateral tendencies. Thus, the relevance and significance of cooperation among BRICS nations has increased. With emphasis on Increasing intra-BRICS trade, BRICS can emerge as five major economic powers of 21st century.
Need and significance for boosting intra-BRICS trade for India:
- Economic growth: The BRICS countries account for over 40% of the world’s population and nearly a quarter of global GDP. BRICS countries’ can contribute to Indian growth with more trade and investment towards making it a $5 trillion economy.
- To reap full potential: India has not harnessed the potential offered by the regional cooperation among BRICS.The BRICS market size has grown to US$ 16.5 trillion in 2015, supported by a large consumer base of over 3 trillion people. Regional cooperation among BRICS can help India to reap this potential and emerge as a superpower.
- Global economic threats: Structural imbalances caused by the global financial crisis and new threats to the global economy posed by trade war and unilateral economic sanctions are threats to Indian economy. In such a situation it is important for India to increase its trade with BRICS partners to safeguard its interests.
- Energy resources: BRICS have an abundance of resources like energy resources in Far East Asia and mineral resources in South Africa. Brazil and Russia are among the world’s largest producers and exporters of natural resources. Thus, it is important to increase intra-BRICS trade especially for India to fulfill its energy demands and growth.
- Bilateral trade: Recently, India has rejected the proposal to join Regional Comprehensive Economic Partnership (RCEP). Thus, India needs to balance the lost opportunity of increasing trade through focus on bilateral trade with other BRICS countries.
What should be done?
- Reducing trade deficit: India’s trade deficit with the rest of BRICS has increased from US$ 8.7 billion in 2006, to US$ 58.4 billion in 2015. To further enhance India’s trade with the BRICS countries, and at the same time to address the rising trade deficit, an important strategy would be to focus on India’s export to these countries. Such a strategy should also contribute to the overall efforts to enhance India’s trade with BRICS.
- Reducing administrative hurdles: It is important to simplify rules and regulations and increase the efficiency of administrative procedures. This will facilitate and accelerate mutual trade and investment.
- Transparency: Efforts must be made to improve the transparency of trade and investment climate. It is important to establish rule based trade and push for it. Policies and bilateral agreements must be carefully framed with clear rules.
- Information exchange: Enhancing consultations and exchanging information on macroeconomic and trade policies is an important pillar to boost bilateral trade. Efforts must be made to make macroeconomic policies conducive and recipient to changing global order.
- Investment: It is important to encourage trade and investment links between BRICS countries. An emphasis on promoting market access on goods and services amongst BRICS countries is needed along with support of industrial complementarities, sustainable development and inclusive growth.
BRICS countries have made significant progress in integrating with the global economy. However, the share of intra-BRICS trade to its global trade is still as low. Further, intra-BRICS trade is dominated by China on both export and import fronts. BRICS are incrementally increasing their global engagements. India should reap the benefit of this association.