In a major diplomatic move, India and the US have finally managed to work out a historic trade deal, which will see the latter slash the reciprocal tariff on Indian goods to 18 per cent. In exchange, India agreed to halt Russian oil purchases and lower trade barriers, US President Trump claimed in his social media post.
Prime Minister Narendra Modi shortly confirmed that he and Trump did indeed have a telephone conversation recently and said that ‘Made in India’ products will now have a reduced tariff of 18 per cent. At the same time, Modi’s carefully crafted text did not mention anything about the country’s refusal to use Russian oil. There was no official confirmation from the Indian side in this regard.
However, regional analysts believe it is unlikely that India has refused to buy Russian oil as part of its trade deal with the US.
South Asia analyst Michael Kugelman told ANI that not much is known about the key aspects
"We don't really know many key aspects of this deal. I mean, President Trump said India has essentially decided to stop many activities, which, frankly, sounds a bit far-fetched. I find it hard to imagine India simply stopping importing Russian oil," Kugelman told news agency ANI
He said it was no surprise that Trump said India would import more American goods. “But there are a number of other key issues that we don't yet know. We don't know whether India has agreed to open access to politically sensitive sectors, such as agriculture. That remains unclear. And I think one of the biggest questions now is what will happen to the 25 per cent tariff the US imposed on India for importing Russian oil?" he said.
India is increasingly diversifying its oil import sources. According to reports, Indian Oil is already switching through traders to Murban and Upper Zakum ( UAE ), Hungo and Clove (Angola), and Buzios (Brazil) grades of crude oil, while another oil giant, Reliance Industries, began negotiations with the US to purchase oil from Caracas immediately after US special forces arrested Nicolás Maduro.
Even if India agrees to cut down on Russian oil, there would be a wind-down period to complete Russian oil deals before imports can be halted.
So far, the government has not instructed them to stop the imports, Economic Times quoted unnamed industry sources.
Moody's has also warned that India's ban on Russian crude oil could tighten global oil supply, boost prices, and lead to higher inflation. The rating agency cites the interconnected nature of global energy markets and suggests that India's energy import decisions have implications beyond bilateral trade, potentially affecting worldwide supply dynamics and market stability.