Modi embarks on BRICS summit: Will Indian diplomacy score again?

Prime Minister Narendra Modi on Sunday left for Brazil, where he will attend BRICS summit and discuss couple of important issues including setting up of a development bank on the line of Indian Monetary Fund and World Bank.

Narendra Modi is known for his nuanced foreign policy approach and recent incidents like safe return of nurses from strife-torn Iraq and open arm invitation from United States are proof of that. Prime Minister will again prove his mettle in Fortaleza, Brazil's northeastern coastal town where the meeting is scheduled for July 15 and 16.

For Prime Minister, this will be the first opportunity at multilateral engagement, where he will meet leaders like Chinese President Xi Jinping, Russian Presisent Vladimir Putin, South African President Jacob Zuma and discuss bilateral issues with them.

India, China wrestling over funding of Development Bank

"I look at the Summit as an opportunity to discuss with my BRICS partners how we can contribute to international efforts to address regional crises, address security threats and restore a climate of peace and stability in the world," Modi said in a statement before departure.

"I also look forward to our discussions to further advance intra-BRICS economic cooperation and our collective efforts to advance global economic stability and prosperity", he added.

A high-level delegation that includes Minister of State for Finance Nirmala Sitharaman, National Security Adviser AK Doval, Foreign Secretary Sujatha Singh and Finance Secretary Arvind Mayaram are also accompanying the Prime Minister.

BRICS summit

BRICS is the association of five major emerging national economies Brazil, Russia, India, China, and South Africa. This is the sixth meet after it started in 2009. South Africa officially joined the block in 2010. Every year leaders of these countries meet and discuss about big issues like global economic growth, peace and stability.

The grouping accounts for almost 3 billion people, more than a quarter of the world's land mass and a combined GDP of USD 24 trillion. BRICS is always held in high regards because two of the world's most powerful nations are associated with it.

Contentious issues

Establishing BRICS Development Bank is on cards with the purpose to give concessional credit to members of group and other developing countries. It will also fund the infrastructure projects of these countries. The Bank which is considered as stepping stone to undercut the IMF and the WB, had its idea proposed by India at a 2012 meeting of the organisation's Finance Ministers in Mexico.

China and India are wrangling over initial corpus and about the locations of its headquarters. Reports say, China wanted to fund more to enjoy greater clout like US and its allies on IMF and WB, but India punctured this nefarious plan of the neighbouring country. India wants each member to give equal share i.e., $5 billion each which will give initial corpus of $50 billion to start with. Erstwhile Prime Minister Manmohan Singh had also proposed the same idea in last summit in South Africa.

But South Africa is of the view that economic size should be the basis for this and if that will be followed upon then China will establish its hegemony. China wants the bank to start its functioning with a start capital of USD 100 billion with China contributing $41 billion, India, Russia and Brazil contributing $18 billion each and South Africa making a contribution of $5 billion.

Another combative issue is Bank's headquarter and both China and India are pushing their interest on the matter. India believes, if China will contribute more, then the Bank's headquarters may go to Shanghai. Centre not only wants its headquarters to be based in India but also wants that its first president is an Indian citizen.

One more issue is about lending of loans. A big showdown continues on whether only BRICS countries will be funded or it will also lend money to other developing and poor countries as well. At the summit, India will also be hoping for an endorsement of the need for UN Security Council reforms.

What India says

When asked about the conflict, an Indian official said, "We are keen on the headquarters and the first president, but nothing has been finalised now. Negotiations are going on".

"The matter has to be settled through consensus," official sources added.

Chinese President's Statement

"There is consensus about the bank but there are some differences regarding technical issues", Chinese President Xi Jinping said.

Modi's past records say that he is no longer a bunny in foreign policy. He was highly applauded for inviting SAARC leaders for his swearing-in ceremony. Then the way he brought back nurses from Iraq was another feather in his cap. This time also Indian diplomacy will get shot in arm and that is for sure.