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Context

• India is all set to initiate the BRICS Startup Forum in 2023: Announced in the 7^th BRICS Industry Ministers’ meeting.

Details

• India will launch a BRICS startup forum this year to facilitate collaboration and share best practices among investors, incubators, and aspiring entrepreneurs.
• Aim: To promote collaboration and knowledge sharing among startups, investors, incubators, and emerging entrepreneurs.

Highlights of the 7^th BRICS Industry Ministers’ Meeting

• The virtual 7th BRICS Industry Ministers’ meeting was hosted by South Africa as the Chair.
• India highlighted the transformation that has taken place in India and also commented on the expanding Startup India initiative that has led to the creation of nearly 100,000 startups in the country.
• India focused on “Transforming Production Systems" and the support India can offer to other BRICS members and the wider international community.
• India’s commitment to “Vasudhaiva Kutumbakam" (‘The World Is One Family’) was highlighted which underscores India’s commitment to being a responsible global citizen and working towards a more inclusive, tolerant, and interconnected world.
• The industry ministers of other BRICS countries (Brazil, Russia, China, and South Africa) also attended the meeting and the joint declaration was adopted.
• They also re-emphasized the need for digitalization, industrialization, innovation, inclusiveness, and investment among BRICS countries.
• They recognized the increasing importance of Industry 4.0 and other emerging technologies in promoting the digital transformation of all economic sectors. Through the declaration, the BRICS members acknowledged the need for human resource development and explored opportunities for cooperation on upskilling and reskilling programs.
• The ministers reiterated their commitment to deepen industrial cooperation and expedite the recovery and growth of the industrial economy through jointly creating an open, fair, vibrant, resilient, and non-discriminatory environment.
• The ministers recognized the key role of Micro, Small, and Medium Enterprises (MSMEs) and the importance of their integration and diversification into global industrial chains, supply chains, and value chains.
• They also underlined the need for creating market opportunities within the BRICS countries for inclusive growth of projects owned/managed by women, youth, and disadvantaged groups.

BRICS:

https://www.iasgyan.in/daily-current-affairs/brics-25

https://www.iasgyan.in/daily-current-affairs/brics-15

The Proposition of BRICS Currency

• Within the BRICS countries of Brazil, Russia, India, China and South Africa, there is a growing clamour to challenge the dollar’s hegemony.

• Russian leader Vladimir Putin said that the BRICS were working on developing a new reserve currency based on a basket of currencies for its member countries.
• With 88% of international transactions conducted in U.S. dollars, and the dollar accounting for 58% of Global Foreign Exchange Reserves, the dollar’s global dominance is indisputable.
• Due to the dollar’s extensive use, the United States enjoys disproportionate sway over other economies. Yet the move to de-dollarization has got accelerated following the Russian invasion of Ukraine.
• All BRICS nations have been critical of the dollar’s dominance for different reasons. Russian officials have been championing de-dollarization to ease the pain from sanctions.
• BRICS Currency would be a major blow to the US dollar, which is currently the world's reserve currency. The US dollar is used in most international transactions, and it is also the currency of choice for many countries when they hold foreign reserves besides BRICS would enhance its global influence, creating a more balanced multipolar world order by including other emerging economies.
• If BRICS were to launch its own currency, it would provide an alternative to the US dollar and could help to reduce its dominance in the global economy.
• There are a number of reasons why there is a need for a new global currency. The US dollar has been losing value in recent years, and it is becoming increasingly volatile. This has made it difficult for countries to plan their economies and has also made it more difficult for businesses to make international transactions.
• The Russia-Ukraine war has also highlighted the need for a new global currency. The US and its allies have imposed sanctions on Russia, which has made it difficult for Russia to trade with other countries. This has had a negative impact on the global economy, and it has also shown the vulnerability of the US dollar-based system.
• The launch of a BRICS currency would be a major step towards a more multipolar world economy. It would give countries more options when it comes to their currency reserves, and it would also make it more difficult for the US to use its financial power to exert political pressure on other countries.
• The US dollar is the world's reserve currency. This means that it is the currency that is most widely used for international trade and investment. The US dollar is also the currency that is used to price many commodities, such as oil and gold.
• The BRICS countries are trying to reduce the influence of the US dollar by increasing their use of their own currencies and by launching a common currency.
• The BRICS countries have not yet announced a timeline for the expansion of the group or the launch of a new currency. However, the fact that they are even considering these steps is a sign that the US dollar's dominance is under threat.

BRICS EXPANSION

• The BRICS brings together five of the largest developing countries in the world—Brazil, Russia, India, China, and South Africa and represents 41 per cent of the global population, 24 per cent of the global GDP and 16 per cent of the global trade.
• While the member nations meet in Johannesburg, several countries, including Argentina, Egypt, Indonesia, the UAE, Saudi Arabia and others, are willing to join the bloc.

The need for BRICS expansion

• BRICS is considering expanding its membership, and a growing number of countries, mostly from the global South, have expressed interest in joining.
• Several countries including United Arab Emirates, Saudi Arabia, Argentina, Iran, Egypt, Bahrain, Indonesia and Kazakhstan have shown their willingness to join the BRICS.
• As per reports, more than 40 nations have indicated an interest in joining the bloc of major developing economies.
• Other reports claimed that 30 countries conveyed their willingness to join the group, with 22 of them applying formally.
• Earlier in June, representatives from Iran, Saudi Arabia, the United Arab Emirates, Cuba, Democratic Republic of Congo, Comoros, Gabon, and Kazakhstan attended a meeting in Cape Town for so-called “Friends of BRICS” talks. Egypt, Argentina, Bangladesh, Guinea-Bissau, and Indonesia participated virtually.

Benefits of the BRICS Expansion plan and launching of BRICS currency

Here are some of the benefits of the BRICS Expansion plan and launching of BRICS currency:

Increased Economic Cooperation: 

• The BRICS countries are working together to increase their economic cooperation.
• This could lead to increased trade, investment, and development.

Reduced reliance on the US dollar: 

• The BRICS countries are trying to reduce their reliance on the US dollar.
• This could give them more control over their own economies and reduce their vulnerability to US economic policies.

Increased influence in the global economy: 

• The BRICS countries are working to increase their influence in the global economy. This could lead to increased trade, investment, and development for these countries.
• When we look at the broader aspect the BRICS Expansion plan and launching of a common currency are ambitious projects. However, they could have a significant impact on the global economy.
• If successful, these projects could lead to increased economic cooperation, reduced reliance on the US dollar, and increased influence for the BRICS countries in the global economy.

Benefits specific to India

• Here are some ways in which India could benefit from the expansion of BRICS and the launch of a new BRICS currency:

Reduced dependence on the US dollar: 

• India is currently heavily dependent on the US dollar for its foreign trade and currency reserves. This makes India vulnerable to fluctuations in the value of the dollar, which can have a negative impact on India's economy.
• A BRICS currency would provide India with an alternative to the dollar, which would reduce its dependence on the US and make its economy more stable.

Increased trade and investment: 

• A BRICS currency would make it easier for India to trade with other BRICS countries. This could lead to increased trade and investment between India and other BRICS countries, which would boost India's economy.

Reduced political pressure from the US: 

• The US has a history of using its financial power to exert political pressure on other countries. For example, the US has imposed sanctions on countries that do not cooperate with its sanctions on Iran. A BRICS currency would reduce India's vulnerability to this type of political pressure from the US.
• Overall, the expansion of BRICS and the launch of a new BRICS currency could have a number of positive benefits for India. These benefits include reduced dependence on the US dollar, increased trade and investment, and reduced political pressure from the US.

Here are some additional details about how India could benefit from a BRICS currency:

Reduced transaction costs: 

• Using a BRICS currency for trade between BRICS countries would reduce transaction costs, as there would be no need to convert currencies. This would make trade between BRICS countries more efficient and would boost economic growth.

Increased financial stability: 

• A BRICS currency would provide a more stable alternative to the US dollar, which is often volatile. This would reduce the risk of financial instability in India and other BRICS countries.

Enhanced economic cooperation: 

• A BRICS currency would help to promote economic cooperation between BRICS countries. This could lead to the development of new joint projects and initiatives, which would boost economic growth in all BRICS countries.

Conclusion:

• An expanded BRICS membership and the launch of a common currency would provide numerous advantages for India, including enhanced trade opportunities, reduced dependence on the US dollar, reduced transaction costs and strengthened regional cooperation.
• By decreasing the influence of the US dollar and promoting greater economic cooperation among emerging economies, the BRICS bloc has the potential to reshape the global financial landscape.
• India, as an active participant in BRICS, stands to gain from these developments and should actively pursue this expansion and currency launch for its long-term economic and geopolitical interests.

PRACTICE QUESTION Q. An expanded BRICS membership and the launch of a common currency has the potential to reshape the global financial landscape. In what ways could India benefit from the expansion of BRICS and the launch of a new BRICS currency? ELucidate.

https://www.livemint.com/news/india/india-to-launch-brics-startup-forum-in-2023-promoting-collaboration-and-knowledge-sharing-among-startups-and-investors-11691480816358.html