BRICS - What Now?

India will chair the July 2026 summit of BRICS under the shadow of the US-Iran war, which has already shaken the geopolitical order and caused a global energy crisis.

Even if the war stops in the coming weeks, its aftershocks will be felt in various ways. In fact, well before the war broke out, US President Donald Trump had disrupted the old economic order with his sanctions-backed tariff policies.

The emerging scenario is bound to call for a revision of the principles governing the world order. But will BRICS measure up to the task though it accounts for 41% of the world's GDP and 28% of global trade?

The India-hosted summit of BRICS to be held this year, will have to face the demand of Iranian President Masoud Pezeshkian and Foreign Minister Abbas Araghchi that India, as chair, should spearhead a ‘strong and constructive’ BRICS intervention in the Iran-US war.

But India would find it extremely hard to oblige, given its dependence on the US for defence against rivals Pakistan and China. In fact, India avoids antagonising the obdurate and mercurial Trump. Silence has been its watchword when faced with a Trumpian conundrum.

Even if India takes up Iran’s case, would Trump lend an ear to such suggestions when he is nursing a bruised ego, having failed to subdue Iran, a third-world country?

India’s policy on West Asia has been contradictory. When Prime Minister Narendra Modi was in Israel in February he pledged ever-lasting support to that country. But when forced to talk to the Iranian President to open the Strait of Hormuz to stranded Indian tankers, he declared that he was a “friend of Iran” as stated by the Iranian state-run Mehr News Agency.

It is not certain if the Iranians were convinced by Modi’s declaration of friendship, especially after his failure to condole the death of their Supreme Leader Ayatollah Ali Khamenei at Israel’s hands. The government of India sent only an official to sign the Iranian condolence book, and that too after four days.

However, Iran must have felt pity for the Indian people when it allowed three Indian vessels to pass through the Strait of Hormuz unharmed, though many more remain in its vicinity for the Iranians’ nod.

India needs the BRICS summit to be a success as such an outcome would help it rehabilitate its lost position in the Global South following its eternal commitment to Israel and its inability to stand up to Trump’s brazen weaponisation of trade instruments.

But BRICS is an unwieldy organisation. It includes both Iran and the United Arab Emirates, two nations on opposing sides of the current West Asian conflict. So far, BRICS has not issued any joint statement on the war under India’s chairmanship, which began in January 2026.

BRICS also has rivals India and China as founding members. These two do not see eye to eye on many critical issues, both within and outside BRICS.

BRICS is a divided house despite the known benefits of being united. India’s approach to BRICS has been cautious, differing from China’s and Russia’s. The latter two view the grouping as a platform to challenge Western influence, especially dollar dominance. But India has backed out of the BRICS anti-dollar campaign to dodge Trump’s 100% US tariff threat.

India is wary about China making BRICS its pathway for the extension of Belt and Road Initiative (BRI) projects, because of its objections to the BRI’s China Pakistan Economic Corridor (CPEC), which, it says, violates its sovereignty over Kashmir.

China and Russia strongly oppose the US-led global order while India wants to pursue a multi-alignment strategy, engaging with both the US and the other major powers. Brazil and South Africa have also adopted flexible foreign policies. Iran is firmly against the West, while Egypt is with the West having got a US$ 8 billion bailout from the IMF. These disparities reveal BRICS as a group more defined by its differences than by any shared values or interests.

While China advocates the swift expansion of BRICS to spread its influence, India is cautious, strongly opposing the entry of Pakistan. But Pakistan is strongly supported by China. While China, with the largest economy by far, stakes a claim to be the leader of BRICS, India, which has had wars with China, does not want to bow to China in BRICS or any other organization for that matter.

BRICS has an institution like New Development Bank (NDB), launched in 2015, to be an alternative source of funding for developing countries. In 2024, the value of trade among the BRICS countries was around US$ 5 trillion, accounting for approximately 22% of global exports. The NDB could facilitate it.

During the 2024 summit held in Kazan (Russia), BRICS had serious discussions around creating a gold-backed currency instead of the US dollar. But India, that was initially supportive, backed out later, as did Brazil, given the dominance of the US in their foreign trade profile.

Recently, India said that Chinese investments in Indian industries would be allowed up to 10% without security scrutiny. But this will not mean that their basic foreign policies, fears and rivalries will change.

India's continued presence in BRICS is, in part, a function of not wanting to leave a vacuum for China to exploit. A withdrawal would invariably cede agenda-setting powers to Beijing without constraint.

At the Kazan summit in October 2024, Prime Minister Modi stated explicitly that all expansion decisions must be taken by consensus and that the criteria established at the 2023 Johannesburg summit, including the requirement that new members maintain diplomatic and friendly relations with all existing members, should be rigorously observed. By this token Pakistan was not admitted nor was it designated as a partner state.

This is not merely about blocking a rival but also about reducing a pro-Pakistan China’s influence. China and Pakistan have often used each other against India.

The fact that BRICS operates by consensus gives India an effective veto and New Delhi is likely to pursue this aspect as a matter of principle rather than an exception.

The New Development Bank set up by BRICS at China’s initiative has many uses. It has equal voting in terms of shares distributed among the five founding members. There are no conditionalities and there is a greater orientation toward local currency financing. Each founding member holds approximately a 20%, and the founding five countries will always retain at least 55 percent of voting rights regardless of future membership expansion.

On local currency lending, the NDB's stated target was to make 30% of its loans in local currencies from 2022 to 2026, and it has issued bonds denominated in renminbi and South African rand.

India has permitted bilateral local currency settlement with select partners, including the UAE and Indonesia, and the Reserve Bank of India has permitted Vostro accounts, which would enable foreign entities to settle trades directly in Indian Rupees with BRICS members.

However, Indian and South African officials have explicitly stated that there is no agenda to create a BRICS currency, nor to replace the dollar's role in global finance.

China's position, on the other hand, has been considerably more aggressive. Beijing's Cross-Border Interbank Payment System (CIPS) had 1,467 indirect participants across 119 countries as of January 2025, linking banks in 185 countries. Beijing has sought to use the NDB as a vehicle to support its BRI-related infrastructure but only to face resistance from New Delhi.

But the NDB's governance norm of decision by greater agreement, if not consensus, has meant that Indian objections carry institutional weight, limiting the bank's expansion into China’s preferred territory.

Thus, BRICS’ financial architecture is in motion but internally riven by contradictions. The NDB is thus underutilised. Indian and South African officials have also explicitly stated that there is no agenda to create a BRICS currency, nor to replace the dollar's role in global finance. The result has been a BRICS financial architecture that is institutionally in motion but internally divided about its direction.