Moneycontrol Pro Panorama | Power plays and market realities

The RIC nations still rely heavily on the Western world as their primary consumer market.

Dear Reader,

The 2025 Shanghai Cooperation Organisation (SCO) Summit was perfectly timed. Set against the backdrop of US President Donald Trump's unpredictable tariff policies affecting international trade, the SCO summit emerges as a potential catalyst for fostering a multipolar world.
Chinese President Xi Jinping articulated a vision for the future, urging nations to "oppose the Cold War mentality, bloc-based confrontation and bullying". He emphasised the importance of safeguarding the international system, with the United Nations at its core, while advocating for an equitable and orderly multipolar world, inclusive economic globalisation, and a more just and reasonable global governance system.

Since its inception in 2001, the SCO has evolved to include key players such as Russia, Belarus, China, India, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, and Uzbekistan. Afghanistan and Mongolia participate as observer states, while 14 additional countries, including several in the Middle East, hold the status of "dialogue partners".

Despite the global attention the summit has garnered—especially the discussions between the leaders of Russia, India, and China (RIC)—its implications for the Indian markets and economy remain questionable. From India's standpoint, the summit carries greater geopolitical significance than economic value. The country is grappling with a steep 50 percent tariff on its exports to the US, which experts estimate could result in losses of around $20 billion—approximately half a percent of India's GDP.

The hope that these countries could replace the US as a primary market through closer ties is optimistic. China, a formidable competitor, produces many of the goods subject to US tariffs, making it challenging for Indian products to penetrate Chinese markets.

Furthermore, China is unlikely to readily embrace Indian goods, and the longstanding trust deficit between India and China will require substantial time and effort to mend. Even though Trump's tariff actions have nudged the neighbours closer, genuine trust remains a distant prospect.
In terms of market potential, Russia does not offer the same economic clout as the United States. Thus, the camaraderie fostered by the RIC framework may not yield significant economic benefits. Additionally, the influx of foreign portfolio investment (FPI) into Indian markets predominantly originates from US and European investors, with contributions from Chinese and Russian investors being negligible.

While the SCO summit serves as a valuable platform for dialogue and may represent an alternative centre of power, transforming geopolitical alignment into economic strength will take time. The RIC nations, recognised as global suppliers, still rely heavily on the Western world as their primary consumer market.

The mechanism established by RIC aims to promote a multipolar world order, striving to balance global power dynamics and reduce dependence on any singular dominant force. However, the intended economic cooperation and regional integration needed to foster mutual growth will take time before tangible results emerge.

In summary, while the RIC meeting may create an appealing narrative, its immediate impact on businesses and markets appears to be limited.

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Shishir Asthana
Moneycontrol Pro