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India has reiterated its position on retaining the US dollar for trade and financial transactions, distancing itself from the de-dollarization efforts within the BRICS bloc.

External Affairs Minister S. Jaishankar addressed the issue in Parliament, affirming that India has no intention of sidelining the dollar, despite discussions within BRICS on reducing reliance on the currency.

Speaking in the Lok Sabha, Jaishankar noted that BRICS has expanded its scope over the years but maintained that India will not support any initiative that undermines the dollar’s role in global trade. His comments come amid former US President Donald Trump’s warnings of potential tariffs on BRICS nations should they attempt to lessen dependence on the dollar.

Jaishankar confirmed that India has conveyed its stance to US authorities during bilateral discussions, stressing that New Delhi does not endorse BRICS' push for an alternative global currency. As a result, the bloc’s de-dollarization agenda may face delays, with the proposed common currency initiative potentially being put on hold.

Shifting Alliances Within BRICS

India’s stance marks a shift in policy following Trump’s return to the White House in November. The move reflects growing diplomatic and economic cooperation between India and the United States, which contrasts with BRICS’ broader goal of reducing dollar dominance in global markets.

Brazil, which holds the BRICS presidency this year, is also reportedly hesitant to advance the de-dollarization agenda. According to four government officials speaking on condition of anonymity, Brazil does not intend to pursue a common currency initiative in 2025. This leaves Russia, China, and Iran as the primary advocates of reducing reliance on the US dollar, with hopes of strengthening their own currencies in global markets.

Economic Implications of De-Dollarization

Analysts suggest that if BRICS were to fully shift away from the US dollar, multiple sectors within the American economy could be affected. The financial sector, in particular, could experience significant disruptions, potentially leading to broader economic consequences.

A decline in demand for the US dollar could ripple through financial markets, impacting global commodity prices and increasing inflationary pressures. The banking sector would likely be the first to experience the effects, with potential spillovers into other industries. If the US struggles to finance its deficit due to declining dollar demand, economic instability could follow, with the possibility of rising prices and financial turbulence.

Despite the uncertainties, India’s decision to maintain its reliance on the US dollar underscores its pragmatic approach to international trade and financial stability. With key BRICS members divided on the issue, the bloc’s efforts to challenge the dollar’s dominance face increasing hurdles.