Bricks cannot de-dollarise its way out of India’s huge trade imbalance

India's trade with BRICS has grown significantly, but the statistics reveal an uncomfortable trade imbalance. While total merchandise trade with the group more than doubled from $203.1 billion to $417.5 billion between FY2021 and FY2026, India's exports increased only 48.8% to $95.7 billion, while imports rose 131.8% to $321.8 billion.

Consequently, the trade gap expanded to $226.1 billion in FY2026, up from $74.5 billion in FY2021. More revealing than the gap's size is the direction of India's economic relationship with BRICS. The grouping's share of India's merchandise imports rose from 35.2% in FY2021 to 41.5% in FY2026, while its share of India's exports fell from 22% to 21.7%.

This indicates that India is increasingly becoming a buyer in the BRICS network, rather than a more balanced partner. Despite the hype around de-dollarisation, the reality is more nuanced. A shift to alternative payment systems, such as local currencies or currency swaps, could help insulate countries from geopolitical tensions and financial disruptions.

However, currencies alone cannot create trade. India's trade with Russia, for instance, has surged from $5.5 billion to $55.4 billion due to energy purchases, but exports have only increased modestly. The challenge lies in finding productive uses for the accumulated foreign currency. The dollar's dominance in global commerce stems from its widespread acceptance, deep financial markets, and vast pool of investable assets.

National currencies, while essential for trade, lack the same level of flexibility. India's trade with BRICS is heavily weighted towards China, which accounts for about 41% of India's total imports from the grouping. This concentration of economic dependence could potentially be alleviated by diversifying trade relationships, but it remains to be seen whether this will result in a more balanced and multipolar BRICS.