The role of global trade and digital payment infrastructure is growing in India’s economic situation. With the expansion of BRICS to 11 countries, this group has become a major part of global merchandise trade. However, the rising trade deficit with it has emerged as a major challenge for India.
Over the past five years, India has achieved a large scale in digital transactions through UPI, but in goods trade, the pace of imports has been much higher than exports. Let us understand the situation of India’s BRICS trade and the rising trade deficit.
What’s Happening?
In FY2026, India’s merchandise trade deficit with BRICS rose to $226.1 billion, which is more than three times the $74.5 billion in FY2021. During this period, India imported $321.8 billion worth of goods from BRICS countries, while exports were only $95.7 billion.
Total goods trade increased from $203.1 billion to $417.5 billion. In this, exports rose 48.8% from $64.3 billion to $95.7 billion, while imports rose 131.8% from $138.8 billion to $321.8 billion.
The share of BRICS in India’s total merchandise imports increased from 35.2% in FY2021 to 41.5%. On the other hand, its share in exports declined marginally from 22% to 21.7%. In comparison, imports from non-BRICS countries rose 77.6% to $453.9 billion, while exports to the rest of the world rose 52% to $345.8 billion.
The Biggest Imbalance with China, Russia and UAE
About 84% of India’s BRICS trade deficit comes from only China, Russia and UAE. Of this, China’s share alone is about 41%. India’s imports from China rose from $65.2 billion to $131.6 billion, while exports declined 8.1% from $21.2 billion to $19.5 billion. This made the trade deficit with China $112.16 billion.
Imports from Russia rose from $5.5 billion to $55.4 billion. This increase was mainly due to energy imports. India’s exports to Russia rose from $2.7 billion to only $4.5 billion. This kept the deficit with Russia at more than $50 billion.
UAE remained India’s largest export destination within BRICS. Here, exports rose 124% to $37.4 billion, while imports rose 140% to $63.9 billion. This kept the deficit at $26.53 billion. The deficit with Saudi Arabia was more than $20 billion and with Indonesia $15.8 billion.
India’s total global merchandise trade deficit also rose from $102.6 billion in FY2021 to $334.3 billion in FY2026. Of this, the BRICS deficit is about 68%.
China’s Dominance in BRICS Trade
In 2025, the 11 BRICS countries exported $5.67 trillion, which is 21.6% of global merchandise exports. On the other hand, their imports were $4.58 trillion, giving BRICS a surplus of about $1.09 trillion. Despite this, mutual trade among BRICS countries is limited. Intra-BRICS exports were 18.8% of their total exports and imports 29.5%. Intra-BRICS exports are only 4.1% and imports 5.4% of global trade.
China has the biggest role in this network. China exported $550.8 billion to other BRICS members and imported $464.9 billion from them. On the other hand, India had the largest trade deficit within the bloc at $226.1 billion. This pattern looks like a China-centric hub-and-spoke.
What Does This Mean for Investors?
The rising trade deficit is not just a trade figure, but is also important for India’s trade and payment policy. India proposed a CBDC Bridge at the New Delhi Summit on 12-13 September. Its objective is to make cross-border transactions faster and cheaper. Its goal is not to create a common currency, but to provide additional payment options.
However, a faster payment system cannot increase exports by itself. If imports continue to remain higher than exports, the issue of currency balance may arise in bilateral settlement. For this, currency-swap arrangements and deeper financial markets will be necessary.
India’s UPI is an example of this digital capability. In August 2026, UPI processed transactions of about $314 billion through 24.51 billion transactions.
India is also focusing on better market access, predictable rules and digital trade documentation. Better market access has been stated as necessary for pharmaceuticals, automobiles, engineering goods, electronics, agricultural products and services. The New Development Bank, whose authorised capital is $100 billion, can play a role in infrastructure finance.
What’s Next?
The proposed CBDC Bridge of BRICS can help in making trade payments easier, but its real importance for India will be only when it leads to better balance in trade relations. Merely changing the method of payment will not reduce India’s trade deficit of $226.1 billion.
The future direction will depend on India’s competitiveness, export capacity, market access and two-way trade with BRICS countries. Therefore, new payment methods like CBDC can create opportunities, but more important for India will be what it exports, how much it exports and how much better the balance becomes in trade with BRICS.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
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