India-US standoff over Russian oil: Let's not waver but resolve it
Mint Editorial Board US President Trump's tirade over India's crude imports from Russia must not shake New Delhi's principled stance on trade. Yet, oil could plausibly be used as a lubricant for an India-US deal to achieve bigger objectives. It is not to fund any war that India imports essential commodities, but to manage its economy well in a volatile world. Gift this article
As trade talks between India and the US enter their final lap, testy grumbles from the White House—aimed ostensibly at influencing the final shape of an agreement—could end up creating schisms in the relationship between the world's two largest democracies.
US President Donald Trump's recent denunciation of India's trade framework, expressed mostly on social media in rapid bursts, is well within his usual range of bluster, but cannot be shrugged off.
Not one to rest on his outbursts, Trump followed that up with another threat to raise levies 'substantially" for buying Russian oil and a statement on TV saying, 'India has not been a good trading partner."
As former US deputy assistant secretary of state Evan A. Feigenbaum has cautioned, Trump's statements risk taking apart painstakingly forged bilateral ties. On its part, India has called the US posture 'unjustified and unreasonable."
Amid this standoff, it seems clear that Trump wants us to import hydrocarbons from the US, with such a commitment baked into the deal that's being worked out.
With US access to our agri and dairy markets already sticking points, it is unfortunate that a heavily traded commodity like oil has been thrown so noisily into the mix. Economic issues should not be allowed to slip down a geopolitical slope so easily. Also read: Trump tariffs: Is the world watching globalization fall apart?
So far, India has held its nerve and stood its ground admirably. While Trump might have his own book of negotiation tactics that include brazen attempts at bullying, New Delhi's stance on securing the nation's economic interests would not waver if a counter-proposal is made that sweetens it for the White House.
Oil is a multi-billion-dollar chip of high optical value that could be placed on the table. It was only after Russia's invasion of Ukraine that New Delhi reached out to Moscow for oil; as the ministry of foreign affairs has stated, this was because West Asian oil was diverted to Europe; and as the Ukraine war made oil imports costly, cheaper Russian shipments helped us keep our trade balance in check.
The global oil market is still in flux. With the Opec+ cartel easing supplies even as overall demand looks wobbly, expectations of a glut have softened global prices.
Layer this with the fact that China, Russia's other big oil customer, is seeking to diversify some of its energy purchases away from the US to Brazil, and it is easy to understand Trump's apparent obsession with tankers that dock in India, whose imports have reportedly averaged 5.2 million barrels per day this year and are set to swell further.
It is true that oil shipments from the US are an expensive option, given the distance and freight cost.
An agreement to buy limited oil quantities from America may work out reasonable for us if such a pact is accompanied by relief on freight (with low optical value) and it helps us keep agri and dairy products off the deal's table.
It is not to fund any war that India imports essential commodities, but to manage its economy well in a volatile world. We must maximize our space to make decisions accordingly. Topics You May Be Interested In Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
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