US' nips at Moscow may sour India ties

New Delhi: The threat of 100% tariffs by Washington for Russian oil purchases hasn't gone down too well in India, given that global energy supplies are getting further squeezed - with the Red Sea blockade by the Houthis cutting off Saudi Arabian crude, on top of the Strait of Hormuz blockade due to the Iran conflict, making a bad situation worse.

"The US is not taking the right approach. Double standards are being applied and may not achieve the desired result at a time when oil supplies from Saudi Arabia are also under stress," a highly placed official told ET. "The move has the potential to damage the India-US relationship. The US needs to work with India and not against it." US President Donald Trump signed into law the Lindsey O Graham Sanctioning Russia and Iran Act on Friday.

India has been in talks with the US over the past few months, conveying the possible adverse impact on ties if up to 100% tariffs are imposed under the legislation. "Making India a punching bag for US foreign policy failures will be counter-productive," said the person cited above. "The Ukraine conflict must be handled with dialogue and diplomacy, and has no correlation with Indian purchase of Russian oil."


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The issue may figure during external affairs minister S Jaishankar's possible discussions with US interlocutors in New York this week.

It may also be taken up during US secretary of state Marco Rubio’s India trip in October.

Jaishankar will be in New York for meetings at the United Nations. His address at the high-level session of the 81st United Nations General Assembly is scheduled for September 26. During the visit, the minister will also attend various plurilateral and bilateral meetings. Rubio will be in New York during September 20-23 for the UN General Assembly meeting.

“China will find a way out to continue to import Russian oil, notwithstanding any sanctions,” said the person cited above. Beijing may even retaliate against any US move to impose tariffs on it.

Chinese President Xi Jinping will be visiting Washington DC this week for a summit and may be received by Trump at Joint Base Andrews, just outside Washington. US Presidents usually welcome visiting foreign leaders directly at the White House rather than at an airport. The last time this happened was in 1959 when Dwight Eisenhower received Soviet leader Nikita Kruschev at the height of the Cold War as both sides sought to manage ties.

The external affairs ministry had issued a strongly worded statement last week after the US Congress passed the bill.

“This issue has been discussed at high levels in recent months with various US interlocutors. Its potential implications for not just the bilateral relationship but also the international energy market have been very clearly articulated by the Indian side,” it had said. “We are monitoring further developments. As stated on several earlier occasions, India remains firmly committed to ensuring energy security for its 1.4 billion people. It will continue to do so through diversified sourcing and on the basis of evolving market dynamics.”

The Indian government has made clear its determination to take all necessary measures to protect its trade and economic interests. The government will work closely with Indian trade and industry groupings to deal with the implications of these developments, the statement said, in the backdrop of the trade pact being negotiated with the US.

The Graham Act, passed by the US Senate last month, was approved by the House in a 262-159 vote last Wednesday.

Last year, Trump had imposed 25% tariffs on India for purchasing Russian oil, but later withdrew it as trade deal negotiations with India progressed.

Russia continues to be India’s number one oil supplier. India imported 2.08 million barrels per day (bpd) of Russian oil in August. Moscow’s share in New Delhi’s crude imports was 45% in August. India will be an official partner at the Russia Energy Week exposition in Moscow next month.