India is going to become one of the top five economies in the world. A strategic review of its trade relations with other members of BRICS is the need of the hour for its growth, given the vibrant presence of the five countries in terms of population, market and economy. BRICS currently comprises 41% of the world population, contributes 24% of the world GDP and over 16% share in the world trade.
The BRICS 2021 Foreign Ministers meeting, held recently, has reiterated the significant role of the five nations body in the world right from addressing the need to have “equitable” access to measures for the pandemic to full implementation of the BRICS Counter-Terrorism Strategy.
In 2001, Jim O'Neill of Goldman Sachs, in his report, projected the BRIC (Brazil, Russia, India and China) as the fastest-growing market economies. After the official formation of BRIC in 2006, South Africa was also made part of it as its full member in 2010. It is estimated that these economies will outpace most of the current major economic powers in terms of growth by 2050.
India holds a crucial position in BRICS ever since its inception in 2006 and, no doubt, will be a major country in the growth estimation given its burgeoning industries, thriving market and huge workforce.
South Africa & Brazil: Emerging Economies of the World
Among the BRICS nations, India is currently placed as a member who is in the middle of a transformation. There are Russia and China which are technologically and economy-wise stronger than India and there are Brazil and South Africa which are yet to see a full swing to become an economic superpower. Currently, India is marching ahead to become an economic superpower with huge market potential and global attention shifting from China to India. Strengthening its footprints in the Brazilian and South African market can boost India’s growth as these two countries are also emerging economies full of potential.
South Africa is the second-largest economy on the African continent and one of the leading trading partners of India. Brazil is also one of the most important trading partners of India in the Latin American region. India has a sizeable business presence in both the countries in the area of pharmaceutical; IT, automobile, banking and mining etc.
South Africa's imports from India in 2020 stood at USD 3.58 billion and its export to India stood at USD 3.22 billion. Bilateral trade between India and Brazil was at US$ 8.2 billion in 2018-19. This included US$ 3.8 billion as Indian exports to Brazil and US$ 4.4 million as imports by India from Brazil.
Given the population and fast emerging markets, these two countries can offer more to India than the current exports mostly comprising minerals and automobiles. Infrastructure and industrialisation are two fast-growing areas in these two economies which India can address.
Tapping Market and Opportunities in Russia
The mainstay of the bilateral trade relationship between India and Russia has mostly been arms sales to India. As per reports, more than 60% of Indian defence forces are equipped with Russian weapons.
The trade between Russia and India stood at USD 10.11 billion in 2019-20 and both countries have set to take the bilateral trade target at USD 30 billion by 2025. However, this is in no way close to the Russia-China trade, which hit $110 billion in 2019. So, far Indo-Russian trade relationship has been mostly one way in which India has been importing weapons and defence technology from Russia. India is the largest buyer of arms from Russia.
But India should consider increasing market share and export to its long time ally. Recently, India and Russia have invested in the oil and gas sectors of respective countries. But there are other areas for exploration as well. Russia is enriched with minerals such as iron ore, chromium, manganese, titanium, nickel, copper, lead. The Indian steel industry can lay its strategic alliance with Russia to develop sourcing raw material from Russia and grab the market for the finished product in Russia.
Learnings from China
Despite a few differences, India and China hold strong economic bond and India is fast increasing the volume of its exports to China. India’s export to China increased by 11% to USD 19 billion in 2020.
India is gaining global attention for its cost-effective workforce and production. There are targeted policies and schemes like Invest India and Skill India to woo foreign investors and at the same time upskilling the Indian workforce to match the surge in demand for skilled labours. Going forward, India can also facilitate a platform, learning from China, where authority can people from the industry with diversified geographical conditions to help them in improving the business scenario.
India is endowed with possibilities due to its demographic dividend, manufacturing growth and huge market. Strategic growth in trade relations with its partners in BRICS will only help India reach its goal faster.
