After five interviewing rounds, a quick trade agreement is expected to be blocked. The disputes are fundamentally, aimed at the American requirements for more access to the large farm and dairy markets of India, and a more controversial point: the continuous purchase of Russian oil by India.
If India and the US do not reach a trade agreement in the coming three weeks, President Donald Trump plans to levy taxes on goods that come from India to 50%. This step would not only hurt India by making its export priceless expensive; It would indicate a fundamental break in a critical strategic partnership.
The adhesive points
After five interviewing rounds, a quick trade agreement is expected to be blocked. The disputes are fundamentally, aimed at the American requirements for more access to the large farm and dairy markets of India, and a more controversial point: the continuous purchase of Russian oil by India.
India has strongly opposed the 50% tariff threat, which could virtually stop bilateral trade. While civil servants in New Delhi still hope that private conversations can de-escalate, the public attitude is phards. From Thursday, Prime Minister Narendra Modi, without mentioning the rates, stated that he was ready to “pay a tough price” to protect the interests of the Indian farming and dairy industry.
There is some room for negotiation. Indian officials have indicated to lower taxes on some American farm products, such as almonds and cheese. But the pressure on his sovereign energy policy is a different matter. India, the world’s third largest oil company, has leaned heavily on Russia, his old defense partner, for crude oil with a discount since 2022. This pressure from the US already has a tangible and harmful effect.
Recent reports indicate that the refineries run by the State of Russian oil by the State have paused as discounts shrinking and the American pressure confirmations. This pressure is in the heart of the refinagic industry of India. The Reliance Industries, the largest refinery in the country, has, for example, built up a core part of its strategy on this trade, so that more than 4 Lakh barrels of Russian oil are imported per day than a third of the total intake with a considerable discount of $ 3-4 per barrel compared to other regular sources. This very profitable scheme is now under direct threat. After the EU decision on Monday to ban refined oil products from Russia, Reliance saw its shares fall more than 3%. The drop has wiped out a stunning £ 66,000 crore from its market value, a grim warning for the financial costs of this conflict.
A forced pivot point to new allies
Faced with such a unilateral pressure, India strengthens his ties with other countries and feels the heat. Together with India, Brazil is another important target of Trump’s rates. Both are founders of the BRICS group. The Brazilian President Luiz Inácio Lula da Silva told Reuters that he would call Premier Modi, followed by the Xi Jinping of China, to coordinate a reaction.
This is not just talking. India works more actively better with Russia and China. Diplomatic visits to Moscow and Beijing have increased, focused on defense and strategic partnership. After years of tension, it is expected that Premier Modi is expected to visit China in a few weeks for a regional safety stop – his first trip since 2018 – where he could meet both President Putin and President Xi. The message is clear: if Washington is on it India as a subordinate instead of treating as a partner, New Delhi will cultivate his other options.
What India is losing
When conversations collapse, the deployment is huge. In the last financial year, India exported around $ 87 billion in goods to the US, from medicines and jewelry to petrochemicals, accounting for almost 2% of GDP from India.
If the rate of 50% is applied, the majority of that trade would evaporate at night. In addition to goods, the tension threatens to spend on the service sector and influence on work visa for the technical professionals who are an important part of the India-US relationship. The Outsourcing industry, a pillar of the Indian economy and a point of criticism in the US, would undergo an existential threat.
In essence, the rate is more than a tax; It is a weapon focused on the heart of the modern Indian economy and its relationship with the West.
(The author of this article is a defense, space travel and political analyst based in Bengaluru. He is also director of Add Engineering Components, India, PVT. LTD, a subsidiary of ADD Engineering GmbH, Germany. You can reach him on: girishlinganna@gmail.com)
(Disclaimer: The views expressed above are the author and do not reflect those of DNA)
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