India-Indonesia Ties in Focus: Prabowo’s Visit, BRICS & Trump’s Tariff Warnings

1 February 2025 Tridivesh Singh Maini

A joint statement issued by India and Indonesia after deliberations between Indian PM Narendra Modi and Indonesian President Prabowo Subianto during the latter’s India visit referred to two important issues. The first reference was to trade in local currencies between both countries and the second was to Indonesia’s entry into BRICS, on January 6, 2025, as a member. US President Donald Trump has repeatedly stated that he will impose tariffs on countries trading in non-dollar currencies and has specifically targeted BRICS. India and Indonesia have been seeking to find common ground on issues about the Global South and to act as a bridge between G7 and G20.

Indonesian President Prabowo Subianto paid a state visit to India from 23-26 January 2025 and was the Chief Guest at India’s 76^th Republic Day. Since taking over as President of the Southeast Asian nation in October 2024, the Indonesian President has visited several other countries including China and the USA. Prabowo’s delegation to India included senior Indonesian officials and businessmen.

The timing of Prabowo’s India visit is important for several reasons. First, 2025 happens to be the 75^th year of India-Indonesia diplomatic relations. Second, both countries in recent years have sought to accelerate economic and strategic ties and the Indonesian President’s visit to India comes days after the inauguration of 47th US President Donald Trump. After several of Trump’s executive orders and announcements on tariffs and statements relating to China’s ties with the US, there is a growing curiosity in several Asian capitals regarding the US approach vis-à-vis Asia during Trump 2.0.

Joint statement issued by both countries in the context of Prabowo’s visit

Both sides agreed to give a push to trade in local currencies. According to the statement, both countries: “.. expressed confidence that the usage of local currency for bilateral transactions would further promote trade between Indonesia and India and deepen financial integration between the two economies.”

A joint statement issued by India and Indonesia referred to two important issues. The first reference was to trade in local currencies between both countries and the second was to Indonesia’s entry into BRICS, on January 6, 2025, as a member.

Several countries have been seeking to trade in non-dollar currencies after the imposition of US sanctions on Russia in the aftermath of the Russia-Ukraine conflict. Non-dollar trade in commodities, especially oil has witnessed a significant rise in recent years.

Recently, Indonesia also entered BRICS as a full member. Indonesia’s entry into BRICS makes it the ninth member of the group. The economic and geopolitical importance of this development was highlighted in the joint statement issued by both India and Indonesia and by Prabowo during his India visit.

The importance given to trade in local currencies between India and Indonesia, as well as the BRICS organisation – and Indonesia’s entry into the same – in the joint statement issued by both countries are essential for more than one reason. US President Donald Trump has repeatedly stated that he will impose tariffs on countries trading in non-dollar currencies and has specifically targeted BRICS. Said Trump after taking over as US President: “As a BRICS nation… they’ll have a 100 per cent tariff if they so much as even think about doing what they thought, and therefore they’ll give it up immediately,”

During his election campaign and after taking over as US President, Trump has repeatedly underscored the point that India and China were “tariff abusers”. On January 28, 2025, the US President said that India, Brazil and China – who happen to be the three founding members of the bloc – were “tremendous tariff-maker(s)”. Trump also said that that given his thrust on “America first” he will be compelled to take firm economic measures against the above countries.

Also Read: Cracks in Trump Camp: H-1B Visas, China as Points of Contention

Trump’s unpredictability

Given Trump’s nature, it is true that some countries may be cautious regarding de-dollarization, or trade-in local currencies. India has already clarified that it does not seek to undermine the US Dollar and has already distanced itself from the idea of a BRICS currency. Other BRICS members including Indonesia may also be cautious vis-à-vis a BRICS currency while supporting de-dollarisation.

Can middle powers work jointly to deal with important global challenges?

In an increasingly unpredictable global environment, countries may likely work together to deal with challenges. India and Indonesia have been seeking to find common ground on issues about the Global South and to act as a bridge between G7 and G20. Both countries have also been proactive in seeking to end the Russia-Ukraine conflict.

It is not just Trump’s economic measures and his criticism of BRICS, but also Trump’s unpredictable approach vis-à-vis China which will be closely watched by countries in Asia.

It is not just Trump’s economic measures and his criticism of BRICS, but also Trump’s unpredictable approach vis-à-vis China which will be closely watched by countries in Asia. On the one hand, some countries in ASEAN will feel relieved if Washington’s ties with Beijing – especially in the economic sphere – are more predictable. For long, they have benefited from stable China-US ties. On the other hand, as China gets more assertive in the Indo-Pacific, several Asian nations would be concerned if Trump’s ties with Asia are driven by mere transactionalism and no long-term strategic vision.

In conclusion, Prabowo Subianto’s India visit is important not just in the bilateral context, but also in the broader Asian and global context.

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