WASHINGTON — The road to a trade deal between India and the US has encountered a major snag. US Commerce Secretary Howard Lutnick has made it clear that India must stop buying Russian crude oil for a deal to be reached. Lutnick told CNBC in a recent interview, “We’re going to sort out India,” but only after the country “stops buying Russian oil.”
Lutnick’s comments come at a time when the two countries are at war and tensions are escalating. In a different interview with Bloomberg, he had said that India will be “at the negotiation table” in “a month or two” and would “say they’re sorry” to the Trump administration. He also said that India would have to pay a 50% duty on its exports if it didn’t “support the dollar, support the United States of America, support your biggest client, who is the American consumer.”
India’s Chief Economic Adviser has warned that the US’s 50% tax on a number of Indian exports might cut the country’s GDP by as much as 0.6%. A 25% tariff on Indian goods and an extra 25% on Russia’s oil purchases are two parts of this punishment that have caused a lot of disagreement.
India, on the other hand, has always said that its decisions on buying energy are based on the best interests of the country and the market. According to Finance Minister Nirmala Sitharaman, India would “undoubtedly continue” to buy Russian oil since it is “what suits us best.” Since the war in Ukraine started, India has been buying a lot more cheap Russian crude oil. Russia now makes up a big part of India’s oil imports.
Even though the US has been using stronger language, officials from both India and the US have said that relations have recently improved. On social media, Prime Minister Narendra Modi and President Donald Trump have both sent each other good messages, showing that they are confident in the trade talks that are going on. Piyush Goyal, India’s Minister of Commerce, said that talks for the “first tranche” of a trade pact are moving along and might be done by November. But Lutnick’s most recent comments make it clear that the US government is still adamant in its demand that India agree with its geopolitical stance on Russia.