Why Linking BRICS Digital Currencies Could Save India Up to $1 Billion a Year
India’s central bank has quietly made one of the most economically consequential proposals in recent BRICS discussions. By urging the government to place interoperability of central bank digital currencies on the BRICS agenda, the Reserve Bank of India is not chasing ideological headlines or currency symbolism. It is targeting a very old and very expensive problem in global trade: the cost and friction of cross-border payments. If implemented properly, the gains for India are not abstract. They are measurable, recurring, and potentially worth close to a billion dollars a year.
The real problem with today’s cross-border payments
India’s trade with BRICS countries runs into hundreds of billions of dollars annually, yet the payments infrastructure supporting this trade is outdated. Transactions are routed through multiple correspondent banks, settlements can take days, FX conversions eat into margins, and reconciliation failures are routine. These frictions are not visible to consumers, but for exporters and importers they quietly compound into real costs. Even small percentage fees, when applied to large trade volumes, become significant drains on competitiveness.
What the RBI is actually proposing
Contrary to popular framing, the proposal is not about replacing currencies or declaring war on the dollar. A linked CBDC framework simply allows participating central banks to enable direct settlement between their digital currencies. Instead of routing payments through several intermediaries, transactions can be settled faster, with fewer layers, and with better traceability. It is an efficiency upgrade to the plumbing of international payments, not a reinvention of the global monetary system.
Where the “up to $1 billion a year” figure comes from
India’s trade with BRICS countries is roughly in the $400 billion range. Not all of this trade would move to a new CBDC-linked system immediately, and not all payments carry high costs today. But even conservative assumptions tell a compelling story. If only half of these trade payments migrate to a cheaper digital settlement rail, and if transaction and FX-related costs fall by even a fraction of a percentage point, the aggregate savings quickly run into hundreds of millions of dollars annually. With higher adoption and deeper cost compression, the savings can approach or exceed the $1 billion mark. This is not a best-case fantasy. It is basic arithmetic applied to large volumes.
Faster settlement and the hidden liquidity gain
Transaction fees are only part of the story. Settlement speed matters just as much. Today, cross-border payments can lock up working capital for days. A one-day reduction in settlement time across a meaningful share of India’s BRICS trade can free hundreds of millions of dollars in trapped liquidity. That translates into lower borrowing needs, improved cash-flow planning, and reduced risk for Indian businesses. These benefits rarely make headlines, but they directly strengthen balance sheets.
Why exporters and MSMEs gain the most
Large corporates often negotiate preferential banking terms and can absorb inefficiencies. Smaller exporters and MSMEs cannot. For them, cross-border payment costs are proportionally higher and settlement delays are more damaging. A CBDC-linked payment rail offers a structural advantage to these firms without subsidies, tax breaks, or special schemes. It improves competitiveness simply by making the system fairer and cheaper.
What this is not about
This initiative is not an overnight escape from the dollar. It does not bypass regulation, undermine central bank control, or dismantle existing banking systems. Domestic laws, capital controls, and compliance frameworks remain intact. The proposal is best understood as an incremental reform that modernises payment infrastructure rather than a radical monetary experiment.
India’s strategic leverage within BRICS
As a key member and agenda-setter within BRICS, India has an opportunity to steer discussions toward practical economic cooperation rather than symbolic declarations. Pushing CBDC interoperability aligns with India’s broader ambition to be a low-friction global manufacturing and trading hub. It is a move rooted in self-interest, but one that also benefits other members by lowering systemic costs.
Conclusion
The significance of linking BRICS digital currencies lies in what it delivers quietly rather than what it proclaims loudly. Reduced transaction costs, faster settlements, freed-up liquidity, and stronger competitiveness for Indian exporters are tangible outcomes. If implemented with discipline and realism, this policy could rank among the most cost-effective trade reforms India has pursued in recent years. The real question is not whether the idea sounds ambitious, but whether India chooses to capitalise on the numbers staring it in the face.
