India's Reserve Bank has begun routing portions of the country's $80 billion welfare programme through the digital rupee in ten state-level pilots, while urging the federal government to put a BRICS-wide CBDC interoperability proposal on the agenda of the bloc's 2026 summit.
India's Reserve Bank has begun routing portions of the country's roughly $80 billion welfare programme through the digital rupee in ten state-level pilots, while urging the federal government to put a BRICS-wide CBDC interoperability proposal on the agenda of the bloc's 2026 summit — a move that would link the central bank digital currencies of Brazil, Russia, India, China and South Africa for cross-border trade settlement and reduce dollar exposure across emerging markets.
The domestic side is the more concrete part of the push. In Maharashtra, farmers in Phulenagar village are receiving programmable subsidies that cover up to 80 per cent of drip irrigation equipment costs, with the e-rupee restricted to approved vendors so the funds cannot be diverted to other purposes. In Gujarat, a pilot targets onboarding 7.5 million households eligible for subsidised food distribution by June, converting traditional welfare disbursements into digital rupee transactions that arrive instantly and clear without intermediary banks.
That use case — programmable, restricted, traceable — is what the RBI has been arguing for since it launched the e-rupee retail pilot in late 2022. India loses an estimated 20 to 30 per cent of welfare disbursements to leakage, fraud and middleman skim, depending on the scheme. A CBDC that can be pre-restricted to specific merchants or product categories closes off most of those pathways without the privacy concerns of a fully surveilled retail token, because the recipient still controls when and where they spend within the allowed set. India has historically resisted private digital currencies on misuse grounds, and the welfare pilots are now the clearest argument the central bank has made for its preferred alternative.
The BRICS proposal is more ambitious and more politically combustible. The RBI has reportedly urged the finance ministry to formally table a CBDC linkage framework at the BRICS summit India will host this year, with the working concept being a settlement bridge — modelled loosely on the BIS's mBridge project that China, Hong Kong, Thailand and the UAE built before the BIS withdrew last year — that would let central banks move tokenised reserves between jurisdictions in seconds, settled in whichever sovereign digital currency the counterparties prefer.
For India, the appeal is straightforward. Roughly 60 per cent of its trade is invoiced in dollars, even when neither counterparty is American, and the cost of routing those payments through correspondent banks runs to billions annually. A direct CBDC corridor with Russia, where India is now the second-largest buyer of crude, would also bypass the SWIFT bottleneck that has constrained that trade since 2022.
The American response has already been telegraphed. Donald Trump has threatened tariffs on BRICS countries pursuing dollar alternatives and has imposed duties on Indian imports tied in part to its purchases of Russian oil — duties that come on top of the EU's sweeping crypto sanctions package targeting the same trade. Whether the BRICS-CBDC plan survives that pressure depends on what the bloc is willing to absorb in tariff costs, and on whether China — which has its own e-CNY ambitions and is unlikely to accept a system that does not give the renminbi reserve-asset status — will share the rails on equal terms.
There is also the technical question. India's e-rupee runs on a centralised ledger operated by the RBI, while China's e-CNY uses a hybrid two-tier system, and Brazil's Drex prototype runs on a permissioned Ethereum fork. None of these are interoperable today. The mBridge project, which is the one functional precedent, took five years to reach pilot stage with four jurisdictions; India's proposal would scale that to five with deeper political tensions between the participants.
The wider context matters. Atlantic Council data shows 72 countries are now in advanced CBDC exploration, with 49 active pilots; only the Bahamas, Jamaica and Nigeria have fully launched. The Bank of Korea's incoming governor argued this month for prioritising CBDCs over private stablecoins, a position that now sits alongside the European Central Bank's similar stance. India's push is not happening in isolation. It is the most politically charged version of a wider central-bank consensus that the dollar-denominated stablecoin model the US is consolidating under the GENIUS Act is not a future they want to subsidise.
The summit is in October. Between now and then, the BRICS finance ministers will hold three preparatory meetings, the first in May. India's domestic pilots will continue regardless — the welfare use case has its own justification — but whether the CBDC linkage framework reaches the summit communique is the live political question, and the answer will tell you more about the next decade of cross-border payments than any single announcement out of Washington this year.
