With Indian negotiators back in Washington this week for a renewed push to seal the India-US trade deal, there are at least three factors that seem relevant to these fresh deliberations.
One, “backchannel” talks, as part of the diplomatic spadework, are learnt to have continued even when trade relations deteriorated. Moreover, on the defence and strategic dialogue, sources said, it has been “very good business as usual.” This is one key reason why strategic ties are on track even if trade talks sputter or face hurdles. New Delhi’s expectation is that if all goes well with the trade negotiations, India could see the two sets of US tariffs, adding up to 50 per cent, being replaced by a “much lower” number.
Two, the Indian position has been adequately clarified to the Americans that there are certain things which India will not yield on, even if there is a cost to pay for it and that New Delhi is willing to bear some pain on certain issues of principles, a government official said.
And that India’s stance of passive resistance, while not being an aggressive stance like that adopted by China, is ostensibly working. New Delhi’s view is that it will not compromise on its strategic autonomy and will not be dictated to by anyone on whom it should be doing business with, particularly when it comes to Russia, a key and time-tested strategic partner.
Three, while the economic advantages are less compelling now to pick up Russian crude now when prices are hovering around $65 a barrel, as compared to nearly double these rates when India started buying Russian oil, there is a tapering that has already commenced.
It is the private companies such as Reliance Industries and Rosneft-owned Nayara Energy that are picking up Russian oil, and the US side is learnt to have initiated separate talks with Indian private refiners on this. President Donald Trump’s statement Wednesday did nuance the warning this time over the tapering of Russian oil, saying this is “a process” and indicating it could take time.
The problem in completely stopping Russian crude buy, despite it not being a compelling issue now from an economic standpoint, is that this is seen in New Delhi as a sovereign decision where no external party should be dictating, or seen to be dictating, the terms of such engagement.
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The bigger issue is what comes next after Russian oil. “Tomorrow, we could be told not to buy S-400 (mobile surface-to-air missile) systems from Russia and only buy equipment from the US, never mind the fact that it comes in with end-use restrictions. If one were to yield on oil, there could be more such demands,” the official said.
“Whatever said and done, the Russians have kept supplying us with arms and ammunition… They have not really failed us ever since the 1970s. That has to be a consideration for us in what is a long relationship with many facets to it,” the official said.
“At the time that India started buying Russian oil, it was an absolute necessity. We actually, in a way, made things easier for the whole world by taking Russian oil when prices were well above $100 plus (per barrel). Today, the market is much more settled. At $65, if you withdraw (from buying Russian oil), prices will go up, but they are not going to be in that ($100 plus) range. So the situation is commercially different,” the official said.
Trump claimed that Prime Minister Narendra Modi assured him that India would stop buying Russian oil and cited a conversation Wednesday. The Ministry of External Affairs Thursday denied knowledge of any such conversation and reiterated its stated position on the Russian purchase for which the US had slapped an extra 25 per cent tariff penalty in August.
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Trump’s public posturing makes it all the more difficult for India to cut back on Russian oil immediately even if it wanted to. Oil, Russia’s biggest source of revenue, is a lever that the Trump administration believes it can use to force the Kremlin’s hand into ending the Ukraine war. New Delhi is the second-largest buyer of its oil after Beijing, and is in the midst of renewed trade pact negotiations with Washington.
Also, even as Indian negotiators are in Washington this week, officials said shared concerns over critical minerals due to China’s curbs could provide the much-needed political push for the India-US trade deal that has remained stalled for months.
In an interview Tuesday, US Secretary of the Treasury Scott Bessent framed China’s new export controls on critical minerals as “China versus the rest of the world”, stating that the US is pushing back firmly and expects strong support from “Europe, India and other Asian democracies”.
Bessent’s remarks could signal an underlying US strategy to ring-fence Chinese trade dominance with the help of its allies, and indicate that despite recent trade tensions with India, Washington still regards New Delhi as a strategic and economic partner – a stance underscored by the renewed escalation of the trade war with China.
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“It is undeniable that China’s aggressive stance (on trade, and issues such as critical minerals) could work to India’s advantage,” the official said.
While high tariffs on Indian products have begun to hurt Indian MSMEs (micro, small and medium enterprises), the White House has also faced sharp criticism for pushing India towards the China camp.
Modi’s recent phone call with Trump, along with the visit by newly appointed US Ambassador-designate Sergio Gor, who met the Prime Minister, External Affairs Minister S Jaishankar and Commerce Secretary Rajesh Agrawal over the weekend, has also built fresh momentum for a long-awaited agreement. India has signalled its willingness to step up energy imports from the US to address the additional tariffs for imports of Russian oil.
On the trade deal too, while an apparent tussle within the Trump administration between the hardliners that include Peter Navarro and others such as Scott Bessent derailed the India deal the first time around, the Indian side too is believed to have contributed to the issues by delays at its end too. “By undoing Deng Xiaoping’s ‘hide your strength, bide your time’ tenet, the present dispensation in China is doing itself some harm. And that could end up helping our case,” the official said.