India should rethink Russian oil imports as US tariffs hit: Raghuram Rajan

Former RBI governor Rajan pointed out that refiners have been earning excess profits from importing Russian oil, while exporters have taken a hit due to tariffs imposed by the US

As 50 per cent tariffs imposed by the United States (US) start to hit Indian exports, former Reserve Bank of India (RBI) governor and senior economist Raghuram Rajan wants India to introspect about who is benefitting from the Russian oil imports and how much.

 

In an interview with India Today TV, he said India has the right to purchase oil from any source. However, he added that if another country exerts pressure by weaponising tariffs, India must ask itself how much it really benefits from these oil purchases and who within the country gains from them.

 

Rajan pointed out that refiners have been earning excess profits from importing Russian oil. "Do they still make those excess profits? Should we take some of those profits and benefit some of the exporters who are being hurt by the fact that they’re buying oil from Russia?” Rajan asked.

 

He reiterated that it is worth considering how much India is benefitting from these oil imports and how much it is losing.

 

“I think we are beyond issues of fairness, sovereignty, etc. We are talking about a situation where it is a power play,” he added. 

 

Russian oil price not different from market price

 

Rajan also stated that the price of Russian oil is not that different from the market price of oil. "We were importing only 2 per cent oil from Russia before sanctions were applied on it, and it became convenient for us to buy Russian oil, as many have said with the connivance of the Americans. Now that the Americans have turned, it is worth asking how much does it benefits us and who it is going to. Do we need to continue this or can we quietly shut it down," Rajan said. 

 

US tariffs and Russian oil

US President Donald Trump-led administration has imposed a 50 per cent duty on Indian imports, which includes a 25 per cent penalty for importing oil from Russia. The US has alleged that India is profiteering from such oil imports, and it is helping Russia to fund its conflicts in Ukraine.

 

Moreover, White House Trade Adviser Peter Navarro went to the extent of labelling the Russia-Ukariane conflict as "Modi's war", referring to Prime Minister Narendra Modi.

 

India is the second largest importer of Russian oil, purchasing around 36 per cent of its total oil imports from Russia in the financial year 2024-25. China is the largest exporter of Russian oil.

 

In view of the same, the US House Foreign Affairs Committee (Democrats) on Thursday also slammed the Trump administration for singling out India while giving leverage to China.

 

“Instead of imposing sanctions on China or others purchasing larger amounts of Russian oil, Trump’s singling out India with tariffs, hurting Americans, and sabotaging the US-India relationship in the process," the committee said.