Why India dropped common currency plan?:Expert cites China’s dominance Trump’s 100% tariff threat as main reasons

India has rejected the creation of a common BRICS currency, choosing instead to settle international trade in local national currencies. As indicated by trade think tank GTRI, fears over China’s economic dominance and US tariff threats might have led to this decision. The threat of Chinese dominance over a shared currency Creating a single BRICS currency requires a central monetary authority, shared fiscal rules, and a common monetary policy. According to a report by the Global Trade Research Initiative (GTRI), BRICS member nations have vast differences in their financial systems, inflation rates, and economic structures. Furthermore, large trade imbalances and China’s massive economic weight mean a unified currency would give Beijing excessive power over other member states. To avoid increasing China’s regional and global influence, India considers a single BRICS currency unrealistic and unworkable.
The pressure from US tariff threats The plan for a common currency also faced heavy external pressure from the United States. US President Donald Trump explicitly warned BRICS nations against creating or backing any unified currency that challenges the American dollar. Trump threatened to impose 100% tariffs on goods coming from BRICS nations if they attempted to undermine the dollar’s status. He warned that any country attempting to challenge the dollar could lose access to the lucrative US consumer market. India’s focus on national currency settlements Instead of a single currency, GTRI notes that India is focusing on practical, bilateral trade arrangements using national currencies like the Indian Rupee. India supports trade invoicing in local currencies, expanded lending in member currencies through the New Development Bank, and linking domestic payment networks. For instance, India supports Project Nexus, which connects instant-payment networks like India’s UPI with Singapore’s PayNow using standard digital links. GTRI highlights that this decentralised approach protects national sovereignty while avoiding China-dominated platforms like CIPS or mBridge. Western sanctions speed up alternative payment links The search for alternative payment methods accelerated after Western nations imposed strict economic sanctions on Iran and Russia. Major Iranian and Russian banks were disconnected from SWIFT, the international financial messaging cooperative. Because dollar transactions move through US-regulated banks, Washington can easily block payments or freeze foreign assets. While these sanctions pushed BRICS members to build alternative payment routes, India prefers non-aligned mechanisms like Special Rupee Vostro Accounts to keep trade safe without waging an anti-dollar campaign. The long-term future of US dollar dominance GTRI concludes that these new BRICS payment systems will not destroy the global dominance of the US dollar in the near future. No alternative currency currently offers the depth, transparency, and liquidity found in American financial markets. While local currency trade may slightly reduce dollar reliance in specific trade routes, internal rivalries within BRICS, currency volatility, and trade imbalances will prevent BRICS from replacing the US dollar at the center of global finance.