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India-France

Context

• Recently, Prime Minister Narendra Modi undertook an official visit to France and had the honor of being the Guest of Honour at the Bastille Day Parade on July 14, 2023.
• Bastille Day, celebrated on July 14, commemorates the storming of the Bastille prison in 1789 during the French Revolution, symbolizing the democratic values of 'Liberty, Equality, and Fraternity.'
• This significant day also marks the anniversary of Fête de la Fédération, held in 1790 to celebrate the unity of the French people.
• The visit took place on the 25th anniversary of the India-France Strategic Partnership, providing an opportunity to shape the future course of this partnership.
• The current visit against this historical backdrop presents a chance to discuss and plan the trajectory of the India-France relationship for the years to come.

Why India-France ties are strong?

• The special strategic partnership between India and France began in 1998, following India's nuclear tests, at a time when many Western nations were distancing themselves from New Delhi.
• Key developments linked to this partnership include the signing of agreements for the supply of 36 Rafale aircraft in September 2016 and an industrial agreement in March 2018 for building six European pressurized water reactors (EPR) at the Jaitapur site.
• The foundation of the India-France relationship revolves around defense, climate, and technology. Unlike defense deals with the US, which face unpredictability due to Congressional interventions and export control regimes, French deals come without such constraints.
• The recent visit resulted in agreements for the acquisition of 26 Rafale-M fighters for the Indian Navy and the co-production of three additional Scorpene class submarines at Mazagon Dock Shipbuilders Ltd. Additionally, both nations collaborate closely on climate change initiatives, as seen in agreements like the Road Map on Green Hydrogen signed in October 2022.
• Both India and France share a commitment to strategic autonomy, pursue independent foreign policies, and advocate for a multipolar world. While recognizing the significance of the US in the global order, both nations prioritize their independence.
• The personal rapport between Prime Minister Modi and President Macron is noteworthy, and despite recent unrest in Paris, it did not hinder the Indian Prime Minister's visit. Both countries have a tradition of not commenting on each other's internal issues, and sensitive topics like the Manipur issue or India's perceived challenges in human rights and religious freedoms were not brought up during the discussions.

Key outcomes

• French President Emmanuel Macron bestowed the highest national honor, the Grand Cross of the Legion of Honour, upon Prime Minister Modi. The Legion of Honor, established by Napoleon Bonaparte in 1802, is awarded for outstanding merit in civilian or military service.
• A joint statement titled "25th Anniversary of the Strategic Partnership between France and India: towards a Century of Indo-French Relations" outlines a 25-year vision roadmap guiding bilateral relations until 2047. This significant year will mark 100 years of India's Independence, 100 years of diplomatic ties, and 50 years of the Indo-French strategic partnership.
• The roadmap is structured around three pillars: partnership for security and sovereignty, partnership for the planet, and partnership for the people.
• The Indo-Pacific region saw the launch of a joint roadmap for collaborative actions. In 2018, India and France established a 'Joint Strategic Vision of India-France Cooperation in the Indian Ocean Region,' leading to plans for an Indo-French development fund for third countries. This fund aims to jointly finance sustainable development projects in the Indo-Pacific, including the establishment of the Indo-French Health Campus.
• Both nations made a joint commitment to combat single-use plastic pollution, targeting items with low utility and high littering potential. This includes a ban on such products.
• In the realm of development finance, initiatives include providing 100 million Euros for City Investments to Innovate, Integrate, and Sustain 2.0 (CITIIS 2.0) and 50 million USD for climate projects and women's empowerment in micro-finance.

Neighbourhood First Policy

Context

The Ministry of External Affairs has disclosed that India has provided 308 lines of credit to partner countries, totaling $32.02 billion, as a component of its development assistance initiative. In alignment with India's 'Neighbourhood First' policy, collaborative grant assistance projects have been launched with countries including Afghanistan, Bangladesh, Maldives, Myanmar, Nepal, Sri Lanka, and Bhutan.

Neighbourhood First Policy: India Extends 308 Lines Of Credit Worth Over $32 Billion

• Breakdown of the credit: 
  • About $17.06 billion to Asian countries 
  • $12.15 billion to African countries 
  • $2.81 billion to other countries
• Mechanism: Development assistance (concessional LOCs) is extended under the Indian Development and Economic Assistance Scheme (IDEAS) through the Exim Bank of India.
  • EXIM Bank was established in 1982 as a specialized financial institution to finance, facilitate, and promote India’s international trade.
• Nature of Projects: About 600 projects including infrastructure, power, connectivity, agriculture, education, and health 
• Neighbourhood First Policy: The Line of Credit are concentrated primarily in India’s neighborhood in Afghanistan, Bangladesh, Maldives, Myanmar, Nepal, Sri Lanka, and Bhutan.
  • Prominent examples– Parliament building in Afghanistan, Supreme Court Building in Maldives, etc. 
  • Bangladesh has received the largest concessional credit given by India to any single country. 
• Global South: India provides capacity-building assistance under the Indian Technical and Economic Cooperation Programme (ITEC) to partners in the global South.
  • Africa: The previous Pan Africa e-Network Project, has been replaced by e-VidyaBharati and e-AarogyaBharati Network Project, for tele-education and tele-medicine services.
• International Collaboration: India also works with international organizations (UNDP, ASEAN, etc.) to finance joint projects and capacity building programmes.

What is ITEC?  

• ITEC or Indian Technical and Economic Cooperation Programme is a bilateral assistance programme, established in 1964, to meet the needs of developing countries, through technological cooperation.
• ITEC is administered by the Ministry of External Affairs.
• India recently announced the Sagar Amrut scholarship for Pacific Island Countries under ITEC. 

What is Line of Credit?

• Definition: A line of credit (LOC) is a borrowing limit that can be used whenever needed. As money is repaid, it can be borrowed again in the case of an open line of credit.
• Examples: 
  • Recently, India extended a $250 million line of credit for Kenya to modernize farming. 
  • Reconstruction of Sri Lankan Railways after the civil war has been done primarily through Indian LOCs.

India's Energy Diplomacy

Context

The effective realization of India's national targets and global climate commitments heavily relies on the crucial role played by states in the country's energy transition.

• The forthcoming G20 forum provides India with a chance to advocate for a multifaceted approach to energy pathways, acknowledging diverse contextual factors.
• India aims to reach 50% non-fossil electricity generation capacity by 2030 and achieve net-zero emissions by 2070.
• The success of India's energy transition is intricately linked to active state engagement, given their pivotal role in overseeing energy production and consumption governance.

Why do States Matter?

• Implementing National Targets:
  • Tailoring Strategies to Local Contexts: The diversity of India's states necessitates a localized approach to energy transition, considering their unique contexts, resources, and development trajectories.
  • Decentralized Implementation: While the central government sets national goals, states have the responsibility to implement policies and action plans at the grassroots level.
    • Their active participation is vital for translating national aspirations into on-ground realities.
• Addressing Legacy Issues:
  • States play a pivotal role in addressing legacy issues plaguing the electricity sector. This includes reducing high distribution losses, improving the reliability of power supply, and enhancing service quality, which are crucial for a smooth energy transition.
• Pioneering Policy Innovations:
  • Laboratories of Innovation: States serve as laboratories for policy experimentation and innovation.
    • For example, early initiatives by Gujarat and Rajasthan on solar, and Maharashtra and Tamil Nadu on wind energy technologies, have contributed significantly to renewable energy uptake at the national level.
    • Similarly, PM KUSUM is an adoption of successful State experiments on the solarisation of agriculture at a national scale.
  • Influencing National Policies: Successful State-level experiments and innovative approaches in renewable energy adoption serve as influential models for the development of national policies and frameworks.
• Harnessing State Resources:
  • Leveraging Localized Resources: Each state in India possesses a unique mix of renewable energy resources, such as abundant solar radiation, wind corridors, and biomass availability. States can harness these resources to promote renewable energy generation and transition away from fossil fuels.
  • Promoting Distributed Generation: States can encourage decentralized renewable energy solutions, such as rooftop solar installations and community-based projects, to harness their localized resources effectively and promote community participation.
• Importance of a State-level Framework:
  • Comprehensive Understanding:
    • A state-level framework provides a holistic understanding of each state's energy transition plans, actions, and governance processes.
    • It enables better coordination, collaboration, and alignment between the central government and states.
  • Evidence-Based Policy Choices: The framework facilitates evidence-based decision-making, ensuring that policies and interventions are based on robust analysis of state-level preparedness, inter-linkages, and potential constraints. It promotes informed choices and efficient resource allocation.
  • Inclusive Stakeholder Engagement: A state-level framework encourages the active participation of stakeholders, including local communities, industry, and civil society.
    • It promotes transparency, accountability, and stakeholder ownership in the energy transition process.

What are the Challenges Associated with States in Energy Transition?

• Balancing the diverse priorities of individual states with the broader national energy goals poses a challenge in achieving a cohesive energy transition agenda.
• Insights from India's progress toward the 2022 target of 175 GW renewable energy reveal complexities, where only Gujarat, Karnataka, and Rajasthan met their specific goals, and about 80% of the current renewable energy capacity is concentrated in six states in the western and southern regions.
• Some states encounter constraints related to financial resources, infrastructure, and technological capabilities, impeding their capacity to implement renewable energy projects seamlessly.
• Inconsistent or intricate regulatory frameworks across states can serve as barriers for investors and developers, causing delays in project implementation and hindering the overall pace of the energy transition.
• Challenges arise in integrating renewable energy sources into the existing power grid, particularly in states with inadequate grid infrastructure. This can lead to limitations in renewable energy generation and transmission.
• Effective coordination and resource-sharing among states are essential for a synchronized energy transition. However, differences in policies, priorities, and administrative processes can create coordination challenges between states.

What are the Other Initiatives Shaping India’s Energy Transition?

• Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA).
• Green Energy Corridor (GEC).
• National Smart Grid Mission (NSGM) and Smart Meter National Programme.
• Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME).
• International Solar Alliance (ISA).

Way Forward

• State Synergy: Unleash the power of collaboration between states, forging alliances that harness their diverse strengths and accelerate the energy transition journey.
• Green Financing Express: Create state-level green financing mechanisms that ride the wave of creativity, attract investments and unlock funding for renewable energy projects.
• People-Powered Revolution: Ignite a people-powered revolution, empowering individuals and communities to become ambassadors of change, driving the energy transition from grassroots to greatness.
• State Trailblazers: Recognize and celebrate state trailblazers who defy limits, setting examples that inspire others, and propel the energy transition forward with their audacious vision and action.

Strengthening multilateral development banks (MDBs)

Context

Multilateralism, the favored approach to international cooperation, has undergone changes in its range, aspects, and results throughout its evolution. The ongoing discourse regarding the restructuring of multilateral development banks (MDBs) mirrors the broader conversation surrounding the significance, substance, and extent of multilateralism. Acknowledging the necessity for reform, President Joe Biden and Prime Minister Narendra Modi highlighted the crucial nature of enhancing and revitalizing the multilateral system.

Evolution of multilateral development banks (MDBs)

• International Monetary Fund (IMF): Established in 1944, the IMF's mission is to foster global monetary cooperation, ensure financial stability, and encourage economic growth. It provides member countries with financial aid, policy guidance, and capacity-building support.
• World Bank Group (WBG): Created in 1944, the WBG comprises various institutions dedicated to supporting economic development and reducing poverty. Its key components include:
  • International Bank for Reconstruction and Development (IBRD): The IBRD extends loans and financial assistance to middle-income and creditworthy low-income nations for development initiatives.
  • International Development Association (IDA): The IDA provides concessional loans and grants to the world's poorest countries, funding projects that target poverty alleviation and sustainable development.
  • International Finance Corporation (IFC): Focused on encouraging private sector investment in developing countries, the IFC offers loans, equity, and advisory services to businesses.
  • Multilateral Investment Guarantee Agency (MIGA): MIGA provides political risk insurance and credit enhancement to investors and lenders involved in projects in developing countries.
  • International Centre for Settlement of Investment Disputes (ICSID): ICSID facilitates the resolution of investment disputes between states and foreign investors through arbitration and conciliation.
• Regional Development Banks (RDBs): Apart from the IMF and WBG, numerous regional development banks have been established to address specific regional requirements. Notable RDBs include:
  • Asian Development Bank (ADB): Founded in 1966, the ADB offers financial support and technical assistance to foster economic development in the Asia-Pacific region.
  • African Development Bank (AfDB): Established in 1964, the AfDB supports social and economic development in African countries through financing and capacity-building initiatives.
  • Inter-American Development Bank (IDB): Formed in 1959, the IDB promotes sustainable development and regional integration in Latin America and the Caribbean via financial and technical assistance.
• Other Multilateral Development Banks: Several additional MDBs have been set up to address specific regional or sectoral needs. Examples include the European Bank for Reconstruction and Development (EBRD), Islamic Development Bank (IsDB), and Caribbean Development Bank (CDB), among others.

Relevance of MDBs

• Financial Assistance: MDBs play a crucial role in providing financial assistance to member countries, particularly middle-income and low-income countries. They offer loans, grants, and concessional financing to support development projects, infrastructure development, poverty reduction, and social programs.
• Development Expertise: MDBs possess extensive technical knowledge and expertise in various sectors such as infrastructure, energy, agriculture, health, education, and governance. They provide valuable advice, capacity building, and knowledge sharing to member countries to help them address development challenges and implement effective policies and programs.
• Catalyzing Private Investment: MDBs play a vital role in mobilizing private sector investment by offering guarantees, insurance, and risk mitigation instruments. They help create a conducive environment for private investment by reducing risks, improving governance, and facilitating public-private partnerships.
• Promoting Sustainable Development: MDBs promote sustainable development by integrating environmental and social considerations into their projects and programs. They support initiatives related to climate change mitigation and adaptation, renewable energy, environmental protection, biodiversity conservation, and sustainable infrastructure development.
• Addressing Global Challenges: MDBs are increasingly focused on addressing global challenges that transcend national boundaries. They support initiatives related to climate change, pandemic preparedness, disaster risk reduction, conflict prevention, and post-conflict reconstruction.
• Capacity Building: MDBs assist member countries in building institutional capacity, improving governance, and enhancing policy frameworks. They provide technical assistance, training programs, and knowledge sharing platforms to help countries strengthen their institutions and implement effective development strategies.

India’s significant role in MDBs

• Shareholder and Contributor: As a member country, India holds shares in various MDBs, including the World Bank Group (WBG) and regional development banks like the Asian Development Bank (ADB). India contributes financial resources to these institutions, which enables them to provide loans, grants, and technical assistance to member countries.
• Voice of the Global South: India often advocates for the interests and priorities of the Global South within MDBs. It seeks to ensure that the concerns and development needs of developing countries, particularly low-income and middle-income countries, are adequately represented and addressed in the policies, programs, and financing decisions of MDBs.
• Policy Formulation and Influence: India actively engages in policy formulation and decision-making processes within MDBs. It participates in discussions, working groups, and committees to shape the strategic direction, operational policies, and priorities of these institutions. India’s perspectives on development issues, poverty reduction, sustainable development, and infrastructure development carry weight within MDBs.
• Bilateral Partnerships: India collaborates with MDBs through bilateral partnerships to implement development projects and programs. MDBs provide financial assistance, technical expertise, and knowledge sharing, while India contributes its own resources and expertise to support development initiatives in areas such as infrastructure, renewable energy, agriculture, and social sectors.
• Promoting South-South Cooperation: India actively promotes South-South cooperation through MDBs. It seeks to foster collaboration and knowledge exchange among developing countries, sharing its own experiences, best practices, and lessons learned in various development sectors. India also supports capacity-building initiatives for fellow developing countries in partnership with MDBs.

Significance of Multilateral Development Banks (MDBs) for the Global South

• Development Financing: Multilateral Development Banks (MDBs) play a vital role in providing essential financial resources, including loans, grants, and concessional finance, to countries in the Global South. This assistance is instrumental in funding various projects, such as infrastructure development, social programs, poverty reduction initiatives, and sustainable development endeavors.
• Technical Expertise and Knowledge Sharing: MDBs contribute extensive technical expertise and platforms for knowledge sharing to countries in the Global South. They offer guidance, share best practices, and provide capacity-building support to aid in the effective implementation of policies, projects, and programs.
• Addressing Development Challenges: The primary focus of MDBs is to address specific development challenges encountered by countries in the Global South, including poverty, inequality, limited infrastructure, and insufficient access to basic services. Collaborating closely with these nations, MDBs assist in designing and implementing tailored solutions for sustainable and inclusive development.
• Advocating for Global South Interests: MDBs serve as forums for advocating the interests and priorities of the Global South within the international development agenda. They ensure representation of the voices and concerns of developing countries, influencing policies, strategies, and funding allocations to meet the development needs of the Global South.
• Climate Finance and Environmental Sustainability: MDBs play a crucial role in mobilizing climate finance and supporting climate action in the Global South. They finance projects related to renewable energy, climate resilience, and sustainable infrastructure development, aiding countries in transitioning to low-carbon and climate-resilient economies.

Reforms needed

• Evolving Development Challenges: Multilateral Development Banks (MDBs) must adjust to changing global development challenges, such as climate change, poverty reduction, sustainable infrastructure, digital transformation, and social inequality. To address these issues effectively, reforms are essential to align the operations, strategies, and priorities of MDBs.
• Inadequate Resources: MDBs encounter limitations in mobilizing sufficient financial resources to meet the increasing demand for development financing. Reforms are needed to improve funding mechanisms, attract additional capital from member countries and private sector partners, and optimize the utilization of existing resources.
• Changing Development Paradigm: The development landscape has shifted towards a greater emphasis on sustainability, inclusivity, and impact. MDBs must incorporate these principles into their policies, project designs, and implementation approaches. Reforms can ensure that MDBs effectively address the multidimensional aspects of development and foster sustainable and inclusive growth.
• Governance and Representation: Reforms are crucial to enhancing governance structures within MDBs, promoting transparency, accountability, and effective decision-making. Prioritizing the voice and representation of developing countries, particularly those in the Global South, can help rectify imbalances and ensure fair and equitable participation in MDB processes.
• Leveraging Technology and Innovation: Reforms should harness the potential of technology and innovation to enhance the efficiency and effectiveness of MDB operations. Embracing digital solutions, data analytics, and emerging technologies can improve project monitoring, evaluation, and knowledge sharing.

Conclusion

Reforming MDBs is crucial for them to effectively address the challenges of the 21st century and enhance human welfare. A pragmatic and comprehensive approach, as outlined by the Expert Group, will be instrumental in making MDBs more adaptive, efficient, and capable of driving positive change on a global scale.

Shanghai Cooperation Organisation (SCO)

Context

• Recently, India presided over the virtual Summit of the Shanghai Cooperation Organization (SCO), where leaders advocated for the establishment of a global order that is "more representative" and multipolar, serving the interests of the entire world.
• During the 23rd Summit, Iran formally became the ninth member country to join the SCO.
• The theme of India's chairmanship is 'Towards a SECURE SCO,' derived from the acronym coined by the Indian Prime Minister during the 2018 SCO Qingdao Summit. The acronym represents: S for Security, E for Economic development, C for Connectivity, U for Unity, R for Respect for sovereignty and territorial integrity, and E for Environmental protection.

What are the Key Highlights of the 23rd SCO Summit?

• New Delhi Declaration:
  • The New Delhi Declaration was signed by the member nations, which states that the international community must come together to "counter the activities of terrorist, separatist and extremist groups, paying special attention to preventing the spread of religious intolerance, aggressive nationalism, ethnic and racial discrimination, xenophobia, ideas of fascism and chauvinism."
• Joint Statements:
  • The leaders adopted two thematic joint statements - one on cooperation in countering the radicalisation leading to separatism, extremism, and terrorism & the second one cooperation in the field of digital transformation.
• New Pillars of Cooperation: India has created five new pillars and focus area for cooperation in the SCO, which include,
  • Startups and Innovation
  • Traditional Medicine
  • Youth Empowerment
  • Digital Inclusion
  • Shared Buddhist Heritage
• India's Reservations on BRI:
  • India refused to be part of the BRI (Belt and Road Initiative) of the SCO members’ economic strategy statement, mentioning “interested member states’.
  • India's opposition to the BRI stems from its inclusion of projects in Pakistan-occupied Kashmir (POK), which India considers a violation of its sovereignty.
• Indian Prime Minister’s Address:
  • The Indian PM highlighted the significance of connectivity for enhancing mutual trade and trust among SCO member states.
  • However, he stressed the need to uphold the fundamental principles of the SCO charter, specifically respecting member states' sovereignty and regional integrity.
• Other Perspectives:
  • The Indian PM criticized countries that employ Cross-Border Terrorism as an instrument of their policies and provide shelter to terrorists, urging the SCO not to hesitate in condemning such nations and emphasized the importance of consistency in addressing these critical issues.
  • The Chinese President, while celebrating the ten-year anniversary of the BRI, mentioned his new Global Security Initiative (GSI), calling for political resolutions to international and regional conflicts to establish a solid security shield in the region.
    • He urged SCO members to formulate foreign policies independently and remain vigilant against external attempts to instigate a new Cold War or camp-based confrontation.
  • The Russian President, attending his first multilateral gathering since the failed rebellion by the Wagner Group, indirectly attributed Ukraine's anti-Russian sentiment to external forces supplying weapons to the country.
    • He emphasized Russia's resilience against external pressures, sanctions, and provocations, citing the unity of Russian political circles and society against attempted armed rebellions.

BRICS

Context

• In a 2001 research paper that emphasized the growth potential of Brazil, Russia, India, and China, the term BRIC was introduced by then-Goldman Sachs chief economist Jim O'Neill. Initially, South Africa was not part of this acronym. Over time, the BRICS group has evolved to include South Africa, and it now comprises Brazil, Russia, India, China, and South Africa. 
• Together, these countries represent a quarter of the world's economy and approximately 40 percent of the global population. The BRICS group has increasingly aimed to serve as a counterbalance to the dominance of Western-led forums like the Group of 7 and the World Bank.
• Initially focused on economic matters, BRICS has gained significance amid geopolitical shifts, particularly after the Ukraine conflict. This has elevated the importance of BRICS in recent times, emphasizing its role beyond economic considerations.

Agenda of the BRICS

The regular annual summit and deliberation of BRICS has considerably widened over the years to encompass topical global issues such as:

• International terrorism
• Climate change
• Food and energy security
• International economic and financial situation
• Reform of the Bretton Woods Institutions
• Trade protectionism and the WTO

Evolution of BRICS Summit

The grouping was first informally formed during a meeting of the leaders of BRIC (Brazil, Russia, India, and China) countries on the sidelines of the G8 Outreach Summit in St.Petersburg, Russia, in 2006. Later that year, it was formalised during the 1st BRIC Foreign Ministers' Meeting in New York.

• 2009: The first BRIC (BRICS minus South Africa) summit was held in Yekaterinburg, Russia.
• 2010: South Africa was accepted as a full member, and the group became BRICS. 
• 2011: South Africa attended its first BRICS summit in China.
• 2014: The Fortaleza Declaration was adopted at the 6th BRICS Summit, and it marked the establishment of the New Development Bank (NDB).
• 2015: The Ufa Declaration of BRICS was adopted at the 7th BRICS Summit held in Ufa, Russia. It covers a range of topics, including global governance, international security, and economic cooperation.
• 2021: The 13th BRICS Summit was held under India’s Chairship (virtual summit). It was the third time that India hosted the BRICS Summit after 2012 and 2016.
• 2022: The Beijing Declaration was adopted at the 14th BRICS Summit, where it was declared that the BRICS countries support talks between Russia and Ukraine.
  • Also, cooperation in the fight against COVID-19, digital transformation, resilience and stability of industrial and supply chains, and low-carbon development.

Functioning of BRICS

Relations between BRICS partners are built on the UN Charter, generally recognised principles and norms of international law, and the following principles: openness, pragmatism, solidarity, non-bloc nature, and neutrality with regard to third parties.

• In accordance with the acronym B-R-I-C-S, the members take turns serving as the forum's chairman on an annual basis.
• BRICS work is based on action plans approved during annual summits since 2010.

Initiatives of BRICS

The BRICS countries have come together to deliberate on important initiatives under the three major pillars:

Political and Security Cooperation:

• To enhance cooperation and dialogue on issues of global and regional security and developments in the global political space for peace, security, and prosperity. Priorities under this pillar are the reform of the multilateral system and Counterterrorism cooperation.

BRICS National Security Advisors’ meeting:

• An important component of the BRICS Political and Security Pillar of cooperation.
• Deliberations on security issues such as counter-terrorism, cyber security, peace and stability, transnational organised crime, as well as the national security of BRICS countries.

Economic and Financial Cooperation

To promote economic growth and development for mutual prosperity through the expansion of intra-BRICS cooperation in sectors such as trade, agriculture, infrastructure, small and medium enterprises, energy, finance and banking.

Contingent Reserve Arrangement (CRA):

• It is a financial mechanism to protect against global liquidity pressures.
• CRA was established in 2015 to provide financial support to member countries that face balance of payments difficulties due to short-term liquidity pressures.
• The legal basis for the Establishment was signed at Fortaleza, Brazil, in 2014.
• The CRA's total lending capacity is $100 billion.

New Development Bank (NDB):

• NDB is a multilateral development bank established by BRICS with the purpose of mobilising resources for infrastructure and sustainable development projects in emerging markets and developing countries (EMDCs).
• The Agreement was signed during the BRICS Summit held in Fortaleza in 2014, and the Bank started operations in 2015.
• Headquarters: Shanghai, China, with regional offices in South Africa and Brazil.
• Apart from the founding members, Bangladesh and United Arab Emirates, Egypt, and Uruguay are the new members. The membership is open to members of the United Nations.
• The voting power of each member shall equal its subscribed shares in the capital.
• However, the share of the BRICS nations can never be less than 55% of the voting power. Also, none of the countries will have veto power.
• NDB has so far committed $32.8 billion to 96 infrastructure and sustainable development projects.

BRICS Payment System:

• The BRICS nations are working towards establishing a payment system that can serve as a substitute for the SWIFT payment system.
• It is considered an alternative to the dollar-dominated payment system to reduce the dependence on the dollar-based system.

Cultural and People-to-People Contacts

To qualitatively enrich and enhance intra-BRICS people-to-people contacts in cultural, academic, youth, sports, and business through regular exchanges, such as:

• BRICS Parliamentary Forum
• BRICS Film Festival
• BRICS Youth Summit
• BRICS Academic Forum (BAF)

India and BRICS

• India is an important member of the BRICS group, and its participation in the organisation has been beneficial in many ways. Some of the key reasons why BRICS is important for India are:
  •  Strategic cooperation: BRICS offers India a key platform for global engagement on security, terrorism, climate, and trade.
  • Economic benefits: As a BRICS member, India gains access to a large market of 3+ billion people, offering vast business opportunities. NDB funding supports India's development projects.
• Reform of multilateral institutions: As a member of BRICS, India has been able to work with other member countries to promote a more inclusive and equitable global order by promoting multilateral reforms.
• South-south cooperation: India, as a leading member of BRICS, has been able to use the platform to promote south-south cooperation in areas such as trade, investment, and technology transfer.
• Pillar of the New World Order: In the fifteenth BRICS Summit, after its expansion, the leaders called BRICS the pillar of the New World Order.
• Dilemma: However, the challenge before India is to choose between a China-centric or a West-centric world order or balance the two.

15th BRICS Summit 2023

The 15th BRICS Summit took place in Johannesburg, South Africa, spanning from August 22 to 24, 2023.
Key Highlights of the Summit:

• Theme: "BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism."
• Gifts from India: The Prime Minister of India presented Bidri Surahi, Nagaland Shawl, and Gond Paintings as gifts to BRICS leaders.
• BRICS-Africa Outreach and BRICS Plus Dialogue: India actively participated in the BRICS-Africa Outreach and BRICS Plus Dialogue, involving leaders from BRICS countries and guest countries from Africa, Asia, and Latin America.
• International Initiatives Invitations: India extended invitations for countries to join various international initiatives such as the International Solar Alliance, One Sun One World One Grid, Coalition for Disaster Resilient Infrastructure, One Earth One Health, Big Cat Alliance, and Global Centre for Traditional Medicine.
• Joint Statement: BRICS leaders expressed their support for India's G20 Presidency.
• Support for G20 Presidencies: The Summit backed Brazil and South Africa's G20 Presidencies in 2024 and 2025, emphasizing the importance of global South representation.
• Opposition to Unilateral Measures: Leaders condemned unilateral coercive actions, advocated for inclusive multilateralism, and upheld adherence to international law.
• Global Governance Enhancement: The Summit aimed to enhance global governance by focusing on agility, efficiency, representation, and democratic accountability.
• Human Rights Cooperation: BRICS nations committed to cooperating on human rights under principles of equality and mutual respect within BRICS and on international platforms.
• Agriculture and Food Security: The leaders pledged to work towards fair agricultural trade, ending hunger, promoting sustainable agriculture, and adopting resilient practices.
• UN Reform: BRICS nations supported comprehensive United Nations reform, including reforms in the Security Council, to enhance democracy, effectiveness, and representation for developing countries.
• Peaceful Conflict Resolution: The leaders reaffirmed their commitment to peaceful dispute resolution through dialogue and inclusiveness, recognizing the importance of women's participation in peace processes.

Expansion of BRICS

Over 40 nations have shown interest in joining BRICS, with 22 formally requesting admission. Consequently, during the 15th Summit, BRICS leaders have established mechanisms for evaluating new members.

• BRICS Expansion:
  • First Phase: Countries such as Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE have received invitations to join BRICS. This expanded membership is scheduled to take effect from January 1, 2024.
• Reasons for BRICS Expansion:
  • China's Strategic Move: China's strategic maneuver for increased global influence is a driving factor.
  • FOMO (Fear of Missing Out): Countries are motivated by a fear of missing out on participation in a prominent international club.
  • Limited Options in Other Groups: Some nations perceive limited options in other international groups, making BRICS an attractive alternative.
  • Anti-Western Sentiment and Global South Unity: There is a sense of anti-western sentiment and a desire for unity among countries in the Global South, contributing to interest in BRICS membership.

Challenges of BRICS Grouping

• Overlap with other groupings: There is a parallel grouping of democracies known as IBSA (India, Brazil, and South Africa), which can lead to overlap in mandates and pose a challenge for BRICS to manage
• Economic slowdown and trade disputes: The ongoing economic slowdown and trade disputes among member states can impact the group's ability to achieve its objectives.
• Geopolitical tensions: The BRICS countries have different geopolitical interests and have been involved in regional conflicts and disputes. For example, China's BRI, 'string of pearls’, and developments at the Indo-China border have raised tensions with India.
• The dominance of three countries: The overwhelming influence of Russia, India and Chinacould potentially hinder the ability of other members, such as Brazil and South Africa, to have a meaningful impact on the group's decisions and direction.
• Paradox of BRICS: Despite several achievements, it began to lose its sparkle. The group may have lost its mojo, but numerous nations want to be admitted, thus showing the paradox of BRICS.
• BRICS Currency and De-Dollarization:
  • In the 15th Summit of BRICS, Brazil's President proposed the creation of a common currency for BRICS nations to reduce vulnerability to dollar exchange rate fluctuations.
  • Difference of opinion: While Brazil sees a common currency as a means of reducing vulnerabilities and increasing payment options, other BRICS leaders have varying opinions.
  • Challenges of a BRICS currency include the need for banking and fiscal unions, macroeconomic convergence, and trade imbalances.
  • De-dollarization would require numerous global entities to independently adopt other currencies.