BRICS - A Look Back at Brazil & India

BRICS – A Look Back at Brazil & India

It has been a little more than a decade since Brazil and India joined the Brazil, Russia, India, China (BRIC) group with hopes to be part of the Chinese plan for Global Dominance in trade and infrastructure development.

As with all good intentions, things sometimes drift away from their promises.

Recently two of the original BRIC signators, Brazil and India, have aligned in several bilateral agreements.

On January 27,  The International Business Times wrote in part:

Key Points:

  • Brazil and India are two of the largest emerging economies in the world
  • Bilateral trade between the two countries is about $8.2 billion
  • Bolsonaro and Modi have many similarities

Brazilian President Jair Bolsonaro was the guest of honor at India’s Republic Day celebrations over the weekend as the leaders of Brazil and India met to sign a series of trade, investment, and security deals.

Several products imported/exported with the Chinese may be impacted by the new bilateral deals. Brazil and India will make investments that in the past have been primarily with the BRIC- or Chinese-backed loans. Security is of concern. India has areas being used for the Chinese “New Silk Road,” also known as the One Belt One Road (OBOR) or the  One Belt Initiative (OBI), enabling neighbor countries easier access inside India.

Two of the countries bordering India have had differences for many years — Pakistan borders northwest India and Nepal is on India’s northeastern border.

Brazil has different considerations from those of India. Deepwater ports that will accommodate large ships from India that can be berthed, if necessary, then proceed to other trade routes in the Pacific Ocean.

The IBT continues, pointing out the heart of the Brazil, India trade deal:

The agreements between two of the most dynamic emerging economies in the world will encompass oil and gas, mining and cybersecurity, among other sectors.

Bolsonaro, making his maiden voyage to India, was accompanied by his daughter Laura, eight ministers, four members of the Brazilian Parliament and various businessmen. [Read Full Article]

This may be a small break in a large dam, however. Brazil and India are looking for alternative trading partners in light of the Chinese financial standing on the world stage.

It was only one day later that another article was written. 

 New Delhi, 28 January 2020 — Indian and Brazil share a common future, stronger ties will help us achieve all our goals: Mr. Jair Bolsonaro, President, Brazil

‘I am extremely proud to be in India and delighted with my successful meeting with Prime Minister Shri Narendra Modi. Both India and Brazil share a common future and I am confident that together we will achieve all our goals in the years to come with a stronger India-Brazil relationship,’ said Mr Jair Bolsonaro, President of Federative Republic of Brazil at the India-Brazil Business Forum (IBBF) organized by ASSOCHAM here today.

Delivering the special address, Shri Piyush Goyal, Hon’ble Minister for Commerce & Industry and Railways, Government of India called the visit of Mr Bolsonaro as one of the most productive and high profile visit ever by a Brazilian President to India. Making a strong pitch for deepening India-Brazil ties he said, ‘Backed by business-friendly environment, rule of law and a vibrant society, India and Brazil are at the cusp of a very bright future.’ Talking about the cooperation in the Railway sector he said, ‘We are very conscious of our responsibility to the environment. We have embarked on a massive electrification drive of the Railway Network and by 2024 we expect the entire Indian railway to 100% run on electricity and by 2030 we plan to make Indian Railways network net zero emission network.’

The railway sector and environmental concerns have been part of the BRICS agenda since its inception. Several programs with BRICS are already being initiated in both Brazil and India.

One of the major BRICS projects is to complete or upgrade to many of the rail systems in India. Many of the railways in India and Brazil are part of the Chinese OBOR program. 

Speaking at the inaugural session, Dr. Niranjan Hiranandani, President, ASSOCHAM advocated strengthening bilateral trade links between the two countries by exploring new trade and commerce avenues. ‘India being a land of opportunities shall draw foreign investments and plethora of opportunities. Both nations should come together and work towards their common goal of fostering sustainable social growth. To further facilitate cooperation between the two countries on the business front we are looking forward to the opening of our ASSOCHAM office in Brazil.’

Welcoming the guests, Mr. Sagar Kaushik, Senior Executive Committee Member, FICCI said, ‘We feel there is a more complementary relationship than competition between India and Brazil. Together, we form an integral part of the global economy as engines of the economic growth. We urge business leaders from both the countries to utilize this platform to create synergies between the two economies.’ (link)

The relationship between Brazil and India during this time may have a large impact on Chinese trade.

With the declining economy of China and the current Corona Virus outbreak, Brazil and India plan to complete the BRICS ongoing projects. Brazil and India are currently indebted to China for infrastructure BRICS projects already in place or being constructed.

Uncertain of the financial ability of BRICS to complete the infrastructure projects such as railways and roadways, Brazil and India will help each other through bilateral agreements to complete ongoing projects.

Could this be a secondary plan to offset the failings in China’s Global Economic goals? It remains to be seen.

The ability of China to service the BRICS-backed financing is at an all-time low as of this report, leaving it exposed economically for other entities to enter into agreements to service their debts. This is what the Indo-Brazilian agreement has done.

The agreements reached between Brazil and India protects the interests of both nations insofar as keeping the needed infrastructure projects progression to continue.

This development may have larger implications in the near future. We will be monitoring this alignment as additional information becomes available.

Also adding to the impact of the Indian and Brazilian bilateral deals, President Trump and Indian Prime Minister Narendra Modi announced what is one of the largest liquid natural gas deal in history in Houston, the nation’s energy capital. The following day, the president appeared as a special guest of Prime Minister Modi at a rally of 50,000 Indian-Americans.  It is clear it is also one of the more complicated relationships. This succession of trade agreements elevates India ranking as the nation’s No. 27-ranked trade partner to No. 9 at that time.

According to a Forbes article in part from Sep 23, 2019 —

As one expression of that clout, India recently replaced Israel as the United States’ No. 1 source of diamonds. It is also a leading, fast-growing source of pharmaceuticals, rivaling more advanced European countries like Ireland and Belgium.

That relationship has a new wrinkle in the name of the world’s most famous philanthropist, Bill Gates, and a now-controversial award the foundation he and wife Melinda intend to give tomorrow to the recently reelected president.

Read Full Article [Here]

As of this writing, President Trump is in India meeting with Indian Prime Minister Modi to address future trade deals and other matters.

~More on this meeting as the president’s visit continues.

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