Mukesh Kaushik3 hours agoAuthor: Anirudh Sharma
At the 18th BRICS Summit, India is set to push a pilot project to connect the Central Bank Digital Currencies (CBDCs) of member countries, with China and Russia expected to join as co-pilots.
The initiative aims to make cross-border trade payments faster and cheaper while reducing BRICS countries’ dependence on third-party currencies such as the US dollar. However, the plan does not involve creating a common BRICS currency.
The summit is scheduled to be held at Bharat Mandapam in New Delhi from September 11 to 13.
Digital rupee, yuan and ruble to be connected
Under the proposed framework, national digital currencies, including India’s digital rupee, China’s digital yuan and Russia’s digital ruble—could be connected through a common cross-border payment infrastructure.
Existing payment networks would also be integrated. These include India’s UPI, China’s CIPS and Russia’s SPFS.
The model would allow member countries to retain control over their own currencies and central banks while enabling smoother international transactions.
Promotional posters for the BRICS summit have been put up at various places in Delhi.
How will India benefit?
For India, the biggest advantage could be lower transaction costs and faster settlement of international trade payments.
Connecting digital currencies and payment systems could reduce the need for multiple currency conversions, lower banking and settlement charges, and shorten the time taken to complete cross-border transactions.
India-Russia trade in local currencies has already been expanding. With BRICS now including countries such as Indonesia, Iran and the UAE, a wider local-currency payment network could provide Indian exporters and importers with more alternatives to dollar-based transactions.
The BRICS economies together account for around 40% of the global economy, giving such a payment system significant potential if it is adopted widely.
India has also studied international experiments such as Project mBridge, Project Aber and Project Dunbar while developing its approach to cross-border digital payments.
BRICS agrees to study invoice discounting mechanism in Jaipur
Alongside digital payments, BRICS countries have reached a consensus to study a ‘BRICS Invoice Discounting Mechanism’ to improve access to finance for small exporters.
Small businesses often struggle to obtain bank loans because they lack traditional collateral such as land or property. The proposed mechanism would allow financing based more on a company’s cash flow, invoices and business potential.
For instance, if an Indian exporter has supplied goods to an overseas buyer but is due to receive payment after three months, the exporter could potentially submit the invoice to a bank and receive working capital immediately instead of waiting for the buyer’s payment.
India’s TReDS experience could prove useful
India already operates the Trade Receivables Discounting System (TReDS), which helps MSMEs raise funds against their outstanding invoices.
Because of its experience with TReDS, India could play an important role in developing the proposed BRICS mechanism.
If implemented, the system could address one of the major challenges faced by Indian MSMEs involved in international trade: the shortage of working capital.
India chairs BRICS with focus on Global South
India is chairing BRICS this year and is hosting meetings, ministerial conferences and other discussions across the country as part of its presidency.
BRICS originally consisted of Brazil, Russia, India and China and was known as BRIC. The term was coined in 2001 by Goldman Sachs economist Jim O’Neill. South Africa later joined, turning BRIC into BRICS.
The grouping has since expanded to include Egypt, Ethiopia, Iran, the UAE and Indonesia.
Under its chairmanship, India is focusing on strengthening the voice of the Global South, expanding economic cooperation, improving energy security, promoting digital technology, combating terrorism and building resilient supply chains.
The broader objective is to strengthen BRICS not merely as a political grouping but as a platform for trade, investment, financial cooperation and development.
For India, the proposed CBDC network and invoice-financing mechanism could therefore become two important pillars of that economic agenda—one aimed at making cross-border payments easier and the other at giving smaller businesses better access to international trade finance.
