Information
U.S. Treasury Secretary Scott Bessent sharply criticised India for dramatically increasing its purchases of Russian oil since the start of the Ukraine war, accusing New Delhi of “profiteering” by reselling cheap Russian crude. He noted that Russia now supplies 42% of India’s oil imports, compared to less than 1% before the war, a much larger increase than China’s, which rose only slightly to 16%. Bessent argued that India’s role in what he called “Indian arbitrage” was unacceptable, while emphasising that China’s long-standing relationship with Russian oil imports made its case “completely different.”
President Donald Trump has responded by imposing additional tariffs on Indian goods, raising the total extra duty to 50% during his term, while avoiding similar measures against China. Trump has framed these tariffs as part of the pressure campaign on Russia to end the war. However, the tariffs have strained U.S.-India relations, derailing hopes for a trade deal between the two countries. In a possible conciliatory move, India temporarily suspended its 11% import duty on cotton, signalling a willingness to address U.S. concerns, though tensions remain high following the cancellation of a scheduled U.S. trade delegation visit to New Delhi.
Source: Reuters, Al Jazeera, CNBC
So What
It is possible that recent U.S. criticism of India’s Russian oil purchases serves as a prelude to Washington adopting a tougher stance against China’s energy ties with Moscow. Should the U.S. escalate its response, potentially through sanctions or additional trade measures, India may be compelled to reduce or halt its imports of Russian oil. Such a shift would likely exacerbate the financial pressure on Russia’s already strained economy, further limiting its ability to withstand the broader consequences of the war in Ukraine.
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