Why India Isn’t Giving Up the Dollar — And What It Means for BRICS’ Currency Ambitions
New Delhi: India is entering the 2026 BRICS summit with a clear message about the future of global payments: New Delhi is open to reducing dependence on the US dollar, but it is not looking to abandon the greenback altogether.
As countries such as China and Russia continue to promote de-dollarisation and discussions about a possible BRICS currency gain attention, India appears to be taking a more cautious and practical route. Rather than trying to replace the dollar with a single alternative currency, New Delhi is focusing on making cross-border payments easier, faster and less expensive.
The distinction is important. India is not rejecting the idea of greater financial independence, but it also does not believe that replacing the dollar overnight is realistic—or necessarily in its own economic interest.
India’s Middle Path on the Dollar
India’s approach reflects the complexity of its economic and diplomatic relationships. The country has strong ties with BRICS members such as Russia, China, Iran and the Gulf countries, while at the same time maintaining important strategic and economic relationships with the United States and Western economies.
For New Delhi, the dollar remains useful because of its global liquidity, wide acceptance and established role in international trade and financial markets.
At the same time, India has recognised the risks that can come with excessive dependence on a single international payment system. This is why it has supported efforts to expand local-currency settlements and improve alternative payment mechanisms.
External Affairs Minister S. Jaishankar has previously made India’s position clear: challenging or targeting the US dollar is not part of India’s economic, political or strategic policy. In other words, India may want more options, but it is not campaigning for the dollar’s removal from the global financial system.
That position has remained consistent even as BRICS has expanded.
BRICS Wants More Financial Independence
The debate has become more significant after the expansion of BRICS. Countries including Egypt, Ethiopia, Iran, Saudi Arabia and the UAE have joined the grouping, bringing together economies with different political systems, currencies, economic priorities and trade structures.
China and Russia have been among the strongest supporters of reducing the dominance of the dollar in international transactions. Brazil has also spoken in favour of greater use of alternative payment arrangements.
However, India has remained cautious about turning the idea of de-dollarisation into a full-fledged campaign to create a common BRICS currency.
The reason is straightforward: creating a genuine common currency would require an extraordinary degree of economic and political coordination.
BRICS members have very different economies, inflation rates, fiscal policies, interest-rate environments and trade balances. Unlike the eurozone, the group does not have a common central bank or a unified fiscal and political structure capable of supporting a shared currency.
A BRICS currency, therefore, may sound attractive politically, but transforming the idea into a functioning international currency would be an extremely complicated process.
India’s Alternative: Better Payment Systems
Instead of immediately pursuing a common currency, India is focusing on something more achievable—improving the payment infrastructure that connects BRICS economies.
One proposal being considered involves linking the central bank digital currencies, or CBDCs, of BRICS countries.
The idea is relatively simple: if participating countries can make their digital payment systems work together, businesses and travellers could potentially transfer money across borders more efficiently without depending entirely on traditional international payment channels.
Such a system could reduce transaction costs, speed up settlements and make cross-border trade and tourism payments easier.
But this would still be a payment innovation rather than a replacement for the dollar.
There is an important difference between creating a new financial “highway” and creating a new global currency.
India appears to be more interested in building the highway.
Why India Is Being Careful
There is also a practical economic problem that cannot be ignored: India’s trade with BRICS countries is heavily unbalanced.
India’s trade deficit with the rest of the BRICS grouping has crossed $226 billion. This means India imports considerably more from BRICS partners than it exports to them.
That imbalance creates a major challenge for any attempt to settle trade entirely in local currencies.
Suppose India and another country agree to conduct more trade using their own currencies. If one country consistently exports much more than it imports, it will accumulate large amounts of the other country’s currency.
Eventually, the surplus country needs to find a way to use, invest or convert those accumulated funds.
This is one of the problems India experienced in its attempts to increase rupee-based trade with Russia. Russia accumulated substantial rupee balances, but finding enough opportunities to spend those rupees on Indian goods and services proved difficult.
The experience showed that changing the currency used for settlement does not automatically solve a trade imbalance.
It can simply move the problem from one account to another.
A BRICS Currency Cannot Solve Trade Imbalances
This is perhaps the most important point in the entire debate.
A new currency can make payments easier, but it cannot automatically create demand for exports.
If India continues to buy significantly more from BRICS countries than it sells to them, simply replacing dollars with rupees, yuan or a future BRICS currency will not eliminate the underlying imbalance.
The real challenge is therefore broader than currency.
India needs stronger exports, more balanced trade flows, reliable settlement mechanisms and sufficient liquidity between participating currencies.
Without these foundations, a common currency or payment system could potentially make transactions faster without making the underlying economic relationship healthier.
CBDCs Could Be the First Practical Step
This is where India’s proposal for greater interoperability between BRICS digital currencies becomes significant.
A CBDC-based payment network could offer a middle path.
Countries would not necessarily have to abandon their national currencies. Instead, their digital payment systems could be connected so that transactions become faster and more efficient.
For India, this approach has several advantages.
It could reduce payment friction while preserving the rupee’s independence. It could also allow New Delhi to participate in BRICS financial initiatives without committing itself to a common currency.
However, creating such a system would require agreement on technology, cybersecurity, regulations, settlement standards, governance and liquidity management.
There would also need to be mechanisms for dealing with large and persistent trade imbalances.
In other words, the technology may be achievable, but the economic and political coordination could be much harder.
The US Factor
India’s relationship with the United States also makes the issue more sensitive.
New Delhi is simultaneously strengthening its engagement with BRICS while maintaining important strategic relationships with Washington and other Western partners.
The United States has been critical of BRICS initiatives that appear to challenge the dollar’s global role. Any move by India that looks like an attempt to bypass the dollar completely could therefore create unnecessary tensions.
India is likely to be careful about how it presents its plans.
Rather than describing the initiative as an attack on the dollar, New Delhi can frame it as an effort to make international payments more efficient and resilient.
That distinction allows India to participate in financial reforms without turning them into an openly geopolitical confrontation.
India’s Real Strategy: Diversification, Not Abandonment
The emerging picture suggests that India is not choosing between the dollar and a BRICS currency.
Instead, it is trying to create more choices.
The dollar will continue to play an important role wherever it remains efficient and widely accepted. Local currencies can be used where bilateral trade patterns make such arrangements practical. Currency-swap agreements can provide additional liquidity, while CBDC links could gradually improve cross-border payments.
This layered approach gives India flexibility.
It also prevents New Delhi from becoming dependent on another single currency or financial system.
For India, that flexibility is particularly important because its economic interests extend far beyond BRICS. The country trades with the United States, Europe, the Gulf, Russia, Southeast Asia and many other markets.
A single replacement for the dollar would therefore not necessarily suit India’s diverse trade relationships.
What Does This Mean for the BRICS Currency Dream?
India’s cautious position could significantly influence the future of the much-discussed BRICS currency.
A truly global BRICS currency would require the group’s largest economies to support the idea strongly and consistently. China would likely favour a system that reduces dollar dominance, while India remains wary of creating an arrangement that could increase another country’s financial influence.
That difference makes a single BRICS currency difficult to achieve in the near term.
Instead, the more realistic possibility is the gradual development of a BRICS payment ecosystem.
Such an ecosystem could include local-currency settlements, central bank currency swaps, digital payment links and improved cross-border financial infrastructure.
It may not have the dramatic political impact of announcing a new common currency, but economically it could prove far more practical.
The Bigger Challenge Is Trade, Not Currency
Ultimately, the success of any BRICS payment initiative will depend on what happens to trade.
A faster payment system is useful, but it cannot compensate for weak export demand or large trade imbalances.
For India, the priority must therefore remain increasing the competitiveness of its exports while expanding opportunities for Indian businesses in BRICS markets.
If trade flows become more balanced, local-currency settlement becomes easier to sustain.
If trade remains heavily one-sided, payment reforms alone cannot solve the problem.
That is why India’s approach appears to be deliberately gradual.
Rather than making a dramatic move away from the dollar, New Delhi is exploring practical alternatives wherever they make economic sense.
A More Practical Future for BRICS
The BRICS currency debate is unlikely to disappear, but India’s position suggests that the future may look very different from the idea of launching one common currency overnight.
The more realistic model could be a network in which different national currencies coexist, payment systems are connected, liquidity is supported through swap arrangements and digital currencies make cross-border transactions more efficient.
For India, this provides the best of several worlds.
It can reduce unnecessary dependence on traditional payment channels without abandoning the dollar. It can deepen financial cooperation with BRICS without surrendering monetary independence. And it can explore new digital technologies without immediately committing to a politically complicated common currency.
The message from New Delhi is therefore less about “killing the dollar” and more about building alternatives where they make sense.
India does not appear interested in replacing one form of financial dependence with another. Its preference is for a diversified system in which the dollar remains available, local currencies have greater space, and new digital payment technologies make international trade easier.
For BRICS, that could ultimately be a more achievable path.
The future of global finance may not be defined by one currency replacing another. Instead, it could be shaped by multiple currencies, interconnected payment systems and countries choosing the settlement mechanism that best serves their economic interests.
For India, that means keeping the dollar where it works, expanding local-currency trade where it is practical, strengthening digital payment connectivity and addressing the trade imbalance that remains at the heart of the challenge.
The goal is not to abandon the dollar. It is to have more than one option.
News source: Information for this article was gathered from a variety of reliable news outlets.
