A man poses for a photograph as he counts US dollar currency notes at a foreign exchange office in Amritsar on May 16, 2026. (AFP)
New Delhi: The question of de-dollarisation must have been at the top of the minds of many of the BRICS leaders because there is a growing realisation that the dollar-dominated global trade framework is not really to the advantage of the Emerging Markets and Developing Countries (EMDCs) and also the Least Developed Countries (LDCs).
And the most effective way out of the vice grip of Western domination is to get into trade payments in the local currencies of the member countries.
It is a solution that is favoured by many of the BRICS members because it significantly reduces transaction costs.
And it is the best way of getting off the global reserve currency, the mighty dollar, which of course is not as mighty as it was even a decade ago.
That is, in effect, de-dollarisation.
But the very mention of the term triggers panic in Washington, especially in US President Donald Trump’s White House.
Though de-dollarisation is an ideal alternative for EMDCs and LDCs, it is not an easy solution.
Working out the feasibility requires a lot of homework, and the administrative rulebook, which is both simple and transparent, has to be put in place.
The declaration showed that the BRICS leadership recognised the complexity of the issue.
The issue is broached in the 90th paragraph of the 140-paragraph summit declaration.
It said, “We acknowledge the efforts of the BRICS Payment Task Force (BPTF) towards exploring pragmatic solutions for efficient cross-border payment mechanisms, drawing on the guidance provided in the Kazan and Rio Declarations.”
Kazan and Rio refer to the 16th and 17th BRICS summits held in Russia and in Brazil in 2024 and 2025.
So, it is a work in progress, and it cannot be pushed through in a rush.
The fact that it is on the minds of the policy-makers can be made out by the fact that the Parliamentary Standing Committee on External Affairs, headed by Shashi Tharoor of the Congress
and former minister of state for external affairs, at its meeting on August 11, had asked the government whether it is going to push for de-dollarisation of the 11-member BRICS trade.
It is a hot-button issue because it is economically radical – breaking away from dollar hegemony – and politically explosive.
But the issue was not on the official agenda at Delhi.
India has ruled out a BRICS currency and also de-dollarisation. Instead, it is keen that intra-BRICS trade should be transacted in local currencies.
That is, India and the United Arab Emirates (UAE) should be trading through their respective currencies, the rupee and the
dirham.
The Reserve Bank of India has mooted that this should be done through the Central Bank Digital Currency (CBDC), which will, in effect, be a digital exchange.
It achieves the goal of breaking away from the dollar, and also pushes forward Prime Minister Narendra Modi’s goal of pushing forward the digitisation process.
This would, however, need nuanced negotiations among all the members – Brazil, Russia, India, China, South Africa, the founding members, and the new members – Egypt, Ethiopia, Saudi Arabia, Iran, the United Arab Emirates and Indonesia – and it would need to be worked out over extended negotiations.
It is not something that can be done in a single meeting or summit. India is not too keen that de-dollarisation should ever be the main agenda because it does not want BRICS to become an anti-United States, anti-West grouping.
India’s own economic ties with the United States, though a little volatile because of President Donald Trump’s mercurial policy stances, have been quite positive.
Trump had earlier this year announced a US-India trade deal with reciprocal tariffs reduced to 18 per cent from an earlier 50 per cent.
This had happened after India and the European Union (EU) finalised a Free Trade Agreement, which EU Commission President Ursula von der Leyen had described as the ‘mother of all deals’.
Trump clearly felt the pressure as India and the EU clinched a free trade agreement even as negotiations on a trade deal between India and the US continue.
Yet the question of de-dollarisation and intra-currency trade also involves the equation between India and China, which have an unspoken rivalry.
China would want to dominate because it is the strongest economy in terms of its GDP size — $19 trillion – which is second only to that of the US’ $30 trillion.
India is the second-largest economy in BRICS with a GDP of $4.2 trillion.
Still, India has a slight advantage over China in terms of perception.
Brazil, with a GDP of $2.64 trillion; Russia with $2.66 trillion; Indonesia with $1.54 trillion; Saudi Arabia with $1.39 trillion – would feel less intimidated by India’s economy than by China’s. Many parts of the world view China’s massive manufacturing and its “debt trap diplomacy” with suspicion.
None of the BRICS members would be tempted to replace the dollar with the Chinese renminbi or yuan.
They would prefer the Indian middle path of trade through their respective currencies.
So, India has deftly skirted the de-dollarisation issue and laid out an elaborate agenda of cooperation among BRICS members, creating connectivity pathways for Micro, Small and Medium Enterprises (MSMEs), which are the real drivers of economic activity in emerging economies.
There is also the move to open up channels of communication for farmers through a digital agricultural market exchange.
It is a bold idea.
How it would work out in actual implementation is something that the representatives of the member states have to work out.
The other major part of the New Delhi summit agenda is to create a common fund for start-ups in the group.
Interestingly, two of the three groups – the MSMEs and the farmers – were seen to require protection from international competition.
But the agenda is trying to connect these vulnerable groups across national boundaries.
This would of course expand market spaces for them if enabling systems are put in place.
It is working fairly well in the EU, though there have been complaints from certain sections.
For example, French farmers have been agitating about the access that other EU members have to French domestic markets.
So, even if the idea of throwing open the networks of cooperation appears ideal on paper, friction on the ground is bound to occur.
India is an enthusiastic votary of public digital infrastructure, and it is keen to use it as a cementing factor for an extended BRICS economic cooperation.
But most other countries, including Brazil, have a lot of catching up to do on the digital front, and they may not readily embrace the digitisation agenda where India and China hold the advantage.
But the move on the part of India and other BRICS members to get off the dollar and work out their financial arrangements in their respective currencies is something that alarms the Americans because it would weaken their political dominance through their coercive sanctions policy.
But the move away from the dollar is bound to happen, though it is not likely to happen overnight.
The EU is a big non-dollar economic zone, with a GDP of $23 trillion and a 13.2 per cent share of global trade.
BRICS is a bigger zone than even the Euro in terms of population, if not exactly in terms of trade.
It accounts for 49.5 per cent of the population, 40 per cent of the global GDP and 26 per cent of global trade.
BRICS will be a big challenge to dollar domination if it can switch to trade in the respective currencies of the member states.
And India can steer this transition in a non-confrontational manner.
