India is preparing to place cross-border digital payments at the centre of the BRICS leaders’ summit in New Delhi on September 12-13. Its proposal to connect members’ central bank digital currencies (CBDCs) could lower transaction costs and strengthen local-currency trade. Yet political distrust, divergent regulations and uneven digital-currency adoption make a bloc-wide payment architecture a long-term project rather than an immediate challenge to the dollar.

From Currency Ambition to Payment Interoperability

The Indian proposal is notably different from the idea of creating a common BRICS currency. New Delhi is instead advocating interoperability between national digital currencies and payment systems, allowing exporters, importers and travellers to settle transactions more efficiently without routing every payment through dollar-based channels.

RBI Governor Sanjay Malhotra said members were examining options including connections between fast-payment systems and CBDCs, although discussions remain at an early stage. The approach builds on the 2025 BRICS declaration in Rio de Janeiro, which called for greater interoperability among members’ payment systems.

For India, this represents pragmatic financial diversification rather than outright de-dollarisation. The objective is to provide additional settlement options, reduce dependence on expensive correspondent banking arrangements and facilitate bilateral trade in local currencies.

India’s UPI Gives It a Strategic Advantage

India enters the discussion with substantial experience through its Unified Payments Interface (UPI), which has already been connected with payment systems in countries including Singapore and the UAE. Its real-time architecture demonstrates that domestic payment infrastructure can be extended across borders.

However, scaling that model across BRICS would be considerably more complicated. Different countries operate under different monetary regimes, regulatory frameworks, cybersecurity standards and financial-control systems.

Politics Could Prove Harder Than Technology

BRICS is not a monetary union. Its members include India, China, Iran, Saudi Arabia and the UAE, whose strategic interests do not always converge. Sanctions exposure, geopolitical rivalries and concerns over financial sovereignty could complicate attempts to build a common payment ecosystem.

India is particularly cautious about deep financial integration with China. Any arrangement involving Chinese payment infrastructure would raise questions about data protection, cybersecurity, gateway control and financial intelligence.

Sanctions compliance presents another obstacle. A functioning BRICS network would require common standards for customer verification, anti-money-laundering checks, suspicious-transaction monitoring and treatment of sanctioned entities. Reaching consensus on these rules could prove more difficult than technically connecting payment systems.

CBDC Differences Create Another Barrier

The participating economies are also at different stages of CBDC development. Some have conducted extensive pilots, while others have limited real-world adoption. Interoperability would require common technical standards covering messaging, digital identity, cybersecurity, settlement and consumer protection.

Currency liquidity presents an additional challenge. Persistent trade imbalances could leave countries holding substantial quantities of another member’s currency. Reliable currency-swap arrangements and central-bank liquidity facilities would therefore be essential.

A Decade of Gradual Integration

The most realistic pathway is incremental: bilateral payment links first, followed by wider local-currency settlement, currency swaps and eventually broader CBDC interoperability. Experts suggest that meaningful integration could take as long as a decade, with regulatory coordination emerging as the principal constraint.

Building Choice, Not Breaking the Dollar

India’s BRICS initiative should therefore be viewed as an attempt to build an alternative payment layer, not overthrow the dollar-based financial system. The immediate prize is cheaper, faster and more resilient cross-border settlement.

If New Delhi can secure agreement on standards, safeguards and pilot projects, BRICS could gradually develop a network of interoperable national systems. Its success will ultimately depend less on technological ambition than on whether politically diverse members can build enough trust to share the financial infrastructure on which that ambition depends.

(With agency inputs)