There is a stir again on the horizon of global politics. This time at the center is former US President and main contender for the 2024 elections, Donald Trump, whose latest announcement has posed a new challenge for India. Trump has announced to impose tariffs up to 50 percent on some of India’s export products, and the reason behind this is India’s purchase of crude oil from Russia at cheap rates.
Not only this, Trump has also threatened secondary sanctions, which can shake India’s energy, trade and foreign policy. The question is whether this pressure from America will affect India’s strategic autonomy, or will India remain firm in protecting its interests?
What is the matter?
On August 7, Trump announced in a press conference that the US would impose a 25% tariff on some of India’s key export products with immediate effect and another 25% increase after 21 days, taking the total tariff to 50%.
With this announcement, Trump warned:
“This is just the beginning. It’s not even eight hours yet. We will see many more steps soon, including secondary sanctions.”
This is a direct indication that if India continues to buy oil from Russia, the US can also impose sanctions on its financial and energy sectors.
India’s response
India has strongly criticized this US move. The Ministry of External Affairs (MEA) said that India’s energy policy is based on its national interests and the needs of its citizens.
“India seeks cheap and stable sources to meet the energy requirements of 1.4 billion people. Buying oil from Russia is a business decision, not a political one. Imposing sanctions on it is unfair and discriminatory.” India also reiterated that many Western countries have also not completely severed trade ties with Russia, so targeting only India shows a one-sided attitude.
Why is it necessary to buy oil from Russia?
India is the third largest crude oil importer in the world and meets more than 85% of its needs through imports. After the Russia-Ukraine war from 2022, Russia started giving crude oil to India 30-40% cheaper. This:
- India’s current account deficit reduced,
- inflation remained under control,
- and the government got relief in oil subsidy
If India leaves this option, oil prices may rise and this will increase the burden on the common people.
Secondary sanctions: How serious is the threat?
Secondary sanctions mean that the US can also punish countries and companies doing business with Russia. The ramifications could be wide-ranging:
- Indian oil companies will not be able to transact in US dollars,
- International banks may hesitate to do business with India,
- Foreign investors may consider India a risky market,
- And India’s economic growth rate may be affected.
This move is not just economic, but also a strategic pressure, which can affect India’s foreign policy.
What are India’s options?
1. Diplomatic solution:
India can find a middle path through high-level talks with the US, which will address the concerns of both sides.
2. Diversification of oil supplies:
India can increase supplies from other sources like Iran, Saudi Arabia, Venezuela along with Russia.
3. Trade in local currency:
Dollar dependence can be reduced by promoting transactions in rupee-ruble, or local currencies.
4. Cooperation on international forums:
A collective response to US pressure can be given by coordinating with BRICS and other emerging economies.
