Engineering of the BRICS Engagement” Is a Valuable Addition to the Growing Literature on the Various Issues Critical to the BRICS

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Engineering of the BRICS Engagement” Is a Valuable Addition to the Growing Literature on the Various Issues Critical to the BRICS ENGINEERING ofthe BRICS ENGAGEMENT AnMVIRDCWorldTradeCentreMumbaiResearchInitiative he concept of a World Trade Centre in Mumbai was born Tof a vision of Sir M. Visvesvaraya, on June 26, 1970, epitomizing a strong conviction that India's future prosperity lay in trade, industrial research and development. He anticipated the need for India's industrial development through research and development in the fields of education, trade, investment and the economy as a whole, with the motto clearly being, ‘Prosperity through trade’. WTC Mumbai serves as a corollary to India's challenges in the areas of economy and trade, virtually growing beyond the ambit or scope of the government and trade promotion organizations. At the time, there was felt the need of a concept of World Trade Centre at a global level which could create the necessary linkages in various sectors of the economy across countries of the world. The World Trade Centre addresses the key issues of International Development through educational programmes, research & publications, tenant facilities and an array of trade activities. The promoters of WTC Mumbai developed the idea and concept of the Centre in a unique tripartite partnership of state, government and the private sector. In due course, WTC Mumbai was registered under the Indian Companies Act, 1956 as a Section 25 not- for-profit company named M. Visvesvarya Industrial Research and Development Centre (MVIRDC). MVIRDC's prime objective is to conduct research and development and its ancillary objective is establishment of WTCs in India and abroad. From there on WTC Mumbai continues to be a living testimony with a promise to excel and go beyond in every field and to take on the challenges of the future. www.wtcmumbai.org ENGINEERINGoftheBRICS ENGAGEMENT Foreword rom the first Summit in Yekaterinburg in 2009 to the Goa Summit in 2016, BRICS has come a long way. What was conceived as a list of four (BRIC) good investment destinations has grown into a five country (BRICS) grouping whose Fagenda is continually expanding. In this short span, BRICS has brought to the table new ideas on global governance issues. The establishments of the New Development Bank (NDB) and the Contingency Reserve Arrangement (CRA) are impressive achievements. However, BRICS also faces many challenges, some of them being the slowing down of economic growth in the five countries and the worrying trend on the global scene of a move against globalization and free trade. The best way to judge BRICS would be to treat it as a work in progress and not as a finished product. This publication “Engineering of the BRICS Engagement” is a valuable addition to the growing literature on the various issues critical to the BRICS. This short research work comprehensively covers all relevant issues – current economic difficulties of BRICS, Intra BRICS cooperation in a variety of sectors, reforms of the global financial institutions and the pressing questions on global governance. A lot of research has gone into the work. Over the last few years, BRICS has been trying out-reach activities as a way of South-South cooperation. This has become an important activity of BRICS even though it was not in the original agenda. This study identifies some areas where this kind of cooperation could prove productive. Employment generation is an area of crucial importance to all the five countries. That is where the significance of MSMEs (Micro, Small and Medium Enterprises) lies. The study has addressed in detail the constraints that the five countries face in expanding MSME activities. The possibilities of cooperation in this sector for mutual benefit should be explored. The question of inclusive growth is another issue which preoccupies the five countries. In the last two decades, the gap between the rich and the poor in the five countries has widened. How can they address this issue without affecting the continued economic growth? This study has some interesting suggestions. The five pillars proposed by India at the Goa Summit have been explored in depth. India is very keen to lay stress on these pillars. The most significant parts of the study are the Conclusion and Recommendations which are practical and could yield quick results. Some recommendations like having a BRICS Secretariat may not be feasible immediately but those on BRICS Stock Exchange, Urban Development Portal and Trade Facilitation Panel have great promise. On the whole, this study will not only help scholars doing research on BRICS but also contribute to policy formulation by the five governments. I congratulate the World Trade Centre, Mumbai for their efforts in bringing out this publication. Mr. H. H. S. Viswanathan Distinguished Fellow, Observer Research Foundation, New Delhi 1 ENGINEERINGoftheBRICS ENGAGEMENT Preface n 2001, Jim O'Neill, British Economist and former chairman of Goldman Sachs Asset Management Company, coined the term BRIC to denote a bloc comprising Brazil, Russia, India and China and how they would emerge as the world’s most dominant Ieconomies by 2050. This implied a landmark shift in the global economic power balance, as no one until then could assume that established nations could lose their pre-eminent position in a not-so-distant future. However, Jim’s reasoning was strong enough to make the skeptics sit up and take a careful note of the rapidly changing dynamic of the world economy. A decade and half later in 2016, WTC Mumbai has taken up this ambitious study to gauge the importance and examine how the alignment of BRICS nations has helped them achieve economic growth and development. The comprehensive study peers into the institutional mechanism for cooperation in trade, investment and sustainable development goals among member nations. The study has collected, collated and studied views of diplomats, government functionaries, businessmen, financial institutions, trade and industry bodies, economists, academicians and other stakeholders to ascertain where the idea of BRICS stands at the beginning of 2017. Somewhat coincidentally, the world economy has been on a roller coaster ride since the first publication of O'Neill’s BRIC research note. However, the BRIC nations (with South Africa making a cut in 2010 to help expand the acronym to BRICS) have registered a fairly higher rate of growth than the average growth rate of the world economy. And in spite of some slowdown in four of the five BRICS economies in the last three years, the general sentiment is that the group’s true potential is yet to be realized and is worth all the time and effort. Some key achievements of the BRICS nations, as noted below, bear a testimony to this belief: 1) Cooperation: The grouping together of such disparate nations such as China, India, Russia, Brazil and South Africa has had enormous influence on how nations perceive themselves and how other nations have come to view the bloc. The group has conducted eight summits till 2016 to develop cooperation across a swathe of areas, ranging from economic and financial domains to anti-terrorism measures. 2) Sustainable Development: Accounting for 40% of the world's population and slightly more than a quarter of the world's land mass, the impact of climate change and global warming has had a direct bearing on BRICS nations. In the recently concluded Paris Talks on capping carbon emissions, India and China have committed huge sums to develop renewable energy. As generous tax breaks and financial assistance make possible the infrastructure for new solar parks and wind energy, these initiatives have the potential to bring cutting-edge technology to poorer nations all around the world. 3) Financial Institutions: The need for financial independence, against having to depend on restrictive, West-led financial bodies, has led to the creation of the New Development Bank (earlier termed as the BRICS Bank). With a capitalization of $100 billion, NDB supports infrastructure and sustainable development projects in member nations. NDB is also establishing a wide-ranging network of global partnerships with other financial institutions, expanding its scope of operation. 4) Arbitration: Realizing the importance of inter-state arbitration, the BRICS nations are striving to develop their own arbitration centers to mediate in cases of disputes using mutually acceptable business and commerce principles. In October 2015, the BRICS Dispute Resolution Center Shanghai was set up with the support of China Law Society and other members of BRICS legal community to accept arbitration cases from commercial parties of the member countries. 5) Visa Regulations: BRICS nations are also working on visa liberalization, to enhance exchange of students, artists, tourists, business professionals and so on. Seamless movement of people across borders would benefit skill development initiatives across nations through exchange of students / professionals. Through a meticulous analysis of the strengths, weakness, opportunity and threat of the individual economies by gathering primary and secondary data and views from experts, the study has presented how appropriate engineering of the BRICS alliance can be mutually beneficial for all the member countries. Mr. Kamal Morarka Chairman, MVIRDC WTC Mumbai 2 ENGINEERINGoftheBRICS ENGAGEMENT C O N T E N T S Pg. no. ¡ Foreword 1 ¡ Preface 2 ¡ Executive Summary 4 Section 1: Overview u Institutional Mechanisms: BRICS 6 v Financial Integration and Investments: Context to India 21 w BRICS and major country exchanges 41 x SME Scenario Inter BRICS 49 Section 2:
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