In the last decade, south-south trade has become an important feature of the global trade order.
Brazil, Russia, India, China and South Africa have emerged as the engines of such south-south trade.
The term BRIC was first used in a Goldman Sachs Report in 2001. This acronym put under a common label for four emerging economies of that time which were growing fast – Brazil, Russia, India and China. With the addition of South Africa in 2010 these countries are now referred to as BRICS. The common feature that binds these countries is their large fast growing economies.
The BRICS grouping has shown strong economic performance in the face of the recent global downturn. The BRICS nations were amongst few countries that were able to come out of the global recession in a short span of time. The global economic crisis has also intensified south-south trade and highlighted its importance in the face of the economic downturn in the two most important poles of world trade – US and Europe.
Political stability alongside the fast economic growth has made the BRICS nations attractive destinations for foreign investment. China, Brazil, Russia and India are among the top 5 host economies for global foreign direct investment (FDI) attracting more than US$20billion annually. However, inflows of FDI into some of these countries have seen a decline in recent years due to the global economic downturn.
India and BRICS
India attaches importance to its engagement with BRICS. Prime Minister, Dr Manmohan Singh, led the Indian delegation to all the three BRICS Summit. India has participated in all the BRICS Meetings of Foreign Ministers, Finance Minsters, Agriculture Ministers, Trade Ministers, Health Minsters, High Representatives on Security, Business Forum, Development Banks, and other sectoral meetings.
CII’s Recommendations
CII feels that the BRICS countries should deepen their economic and trade relations. Greater cooperation with each other will help them to reinforce their position in world affairs.
Goods trade: Trade-oriented investments for joint ventures between the countries would best open up the route for enhancing goods trade. Holding trade fairs at regular intervals will also promote bilateral trade to a great degree.
Services trade: There should be strong engagement among the countries across diverse services sectors. India and China may initiate bilateral treaties with other BRICS countries, which should include trade in services and investment.
Investment: The countries should also identify some key service sectors where they can step up investments. Increasing cross-border investment among the BRICS countries should be an immediate goal of the Governments. An investment treaty can also be negotiated. Despite the importance of Government role, industry-led initiatives via the investment route will favour deeper engagement of the economies.
Joint Institutions: The BRICS group needs to create joint institutions. Creation of joint institutions will enable them to work out a common plan of action. These institutions will also provide a more credible alternative for achieving an inclusive social and economic development globally.
Establishing a Development Bank: At the Summit in Sanya in 2011, BRICS leaders agreed to “strengthen financial cooperation” among their individual development banks. At New Delhi Summit, the leaders must look into the operational modalities for establishment of financial institutions such as a Development Bank or a common Investment Fund.
SMEs: The countries should identify some critical SME sectors where more collaboration and more coordination among them can be done.
Technology transfer: technology sharing amidst the BRICS nations can be a lucrative investment for long term development of the economies. India may offer its capacities in technology transfers in – >> ICT >> Healthcare & pharmaceuticals >> Power >> Infrastructure >> HRD & training
Climate change: The rapid development in the BRICS economies also make them fast-growing energy users and carbon emitters. China is the largest energy user and highest carbon emitter in the world. The countries can collaborate closely on energy security, emissions, efficiency, and renewable energy as well as on global discussions on mitigating climate change.
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