BRICS as growth catalyst: 2025 BRICS Summit

 Context: The 2025 BRICS Summit will take place in Rio de Janeiro, Brazil on July 6-7. The 17th edition of BRICS Summit focuses on the theme- 'Strengthening Global South Cooperation’.

About BRICS

• BRICS is an intergovernmental organisation comprising ten countries- Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, United Arab Emirates and Indonesia.
  • The acronym ‘BRIC’ was coined by economist Jim O'Neill in 2001.
  • Founding countries of BRIC: Brazil, Russia, India, and China. 
  • First formal BRIC summit: Held in 2009 in Yekaterinburg, Russia
  • South Africa joined BRIC in 2010, transforming BRIC to BRICS. 
• New members: Egypt, Ethiopia, Iran, and the UAE joined BRICS as full-time permanent members in 2024. Indonesia was admitted as the full-time member in 2025. 
• BRICS was conceived as a counterweight to the Group of Seven (G7) developed economies, and has emerged as a formidable bloc for political and diplomatic coordination among Global South nations.

Objectives:

• To promote economic growth, strengthen cooperation in areas like trade, investment, and infrastructure.
• Coordination in global governance and advocating for reforms in institutions like the United Nations (UN) and International Monetary Fund (IMF). 
• Cultural and social exchange by enhancing people-to-people connections.

Economic Importance of BRICS+:

• BRICS+ represents nearly 55% of the global population and accounts for nearly 40% of global GDP, based on purchasing power parity, exceeding that of the G7. 
• Growing influence in global trade and investment through the New Development Bank. 
• Contingent Reserve Arrangement (CRA) under BRICS USD 100 billion CRA is established to provide financial support to member countries in times of balance of payments crises.

New Development Bank

• NDB is a multilateral development bank established by BRICS.
• Objective: To mobilise resources for infrastructure and sustainable development projects in emerging markets and developing countries (EMDCs).
• Initial authorised capital: $100 billion.
• Headquarters: Shanghai, China.

BRICS as Platform for South-South Cooperation:

BRICS grouping has emerged as a significant platform for fostering South-South cooperation in the evolving global order. 

• Diversified Representation: BRICS+ has included countries from Africa and Asia to enhance BRICS' representation of developing nations. Diverse BRICS gains legitimacy to advocate for Global South issues like fair-trade, climate justice, and technology access.
• Economic Collaboration: Intra-BRICS integration encompasses free trade agreements and export-oriented strategies, including tariff exemptions and reductions. This encourages regional and inter-regional value chains, reducing over-dependence on Western supply chains. It would ultimately lead to trade expansion, and rise in both inward and outward foreign direct investment. 
• Financial Independence:
  • The New Development Bank (to finance infrastructure and development projects) is a credible alternative to existing financial institutions (IMF, World Bank dominated by western powers).
  • BRICS nations have agreed to promote use of local currencies in trade. E.g., UAE and India trade in Rupees and Dirhams instead of the US Dollar. The current intra-BRICS trade stands at over $600 billion.
  • The plan to launch a common BRICS currency is under consideration. 
• Global Governance Reforms: BRICS provides a platform to advocate for a more multipolar world order and reforms in global institutions like the WTO, IMF, and UN. E.g., reforms to the UNSC to include more representation from the Global South. The reforms would benefit Indian industry by ensuring fairer trade rules, better dispute settlement mechanisms, and more balanced development policies.
• Technology Sharing: BRICS+ members share technology particularly in areas like digital payments and renewable energy. E.g., Collaboration in digital payment systems (India’s UPI and China’s Cross-Border Payment Systems). 

Challenges faced by BRICS:

• Diverse Interests:
  • Member states have varying economic interests and geopolitical alignments which can hinder collective action. E.g., India and Brazil maintain strong ties with the US, while Russia and China adopt anti-West stances​. 
  • New members like Iran and UAE add to the ideological diversity complicating consensus-building.
• Lacks Institutional Framework: BRICS lacks formal treaty or secretariat, or enforcement mechanisms and thus relies on consensus-based decision-making​. This makes it difficult for coordination and policy implementation.
• External Pressures and Sanctions: BRICS members (particularly Russia) face economic sanctions from Western countries. This can limit their ability to cooperate and implement joint initiatives.
• Internal Economic Challenges: Some BRICS members (such as Brazil and South Africa) face significant domestic economic challenges which can divert attention from regional cooperation.

BRICS+ marks an important step toward a multipolar world and empowerment of the Global South.  The need of the hour is to harmonise BRICS customs ecosystem- including Mutual Recognition Agreements, streamlined documentation, and the elimination of non-tariff barriers to facilitate smoother trade flows and economic cooperation. 

BRICS directly complements India’s long-term agenda of sustainability, digital leadership, and inclusive growth, making Indian enterprise a key driver of the bloc’s future direction.