India wary as US' Russia tariff Bill advances, keeps eye on trade talks

Official says trade talks with Washington remain 'reassuring'

India is concerned about a bipartisan US Senate Bill that could expose it to punitive tariffs of up to 100 per cent over its purchases of Russian oil, but a government official said ongoing trade negotiations with Washington have been “reassuring”.

 

“We are engaging with the US regularly,” the official said. “The talks have been reassuring,” the official added without elaborating.

 

The US Senate last week passed a Bill that would allow Washington to impose tariffs on major buyers of Russian energy. This comes just six months after the White House withdrew a 25 per cent Russia-related levy on Indian goods.

 

 

The measure does not automatically impose a tariff on Indian goods, as the US House of Representatives is yet to consider the legislation. The Bill could then be sent to US President Donald Trump for approval. It also contains a provision allowing Trump to waive the sanctions if he determines that doing so is in the US national interest.

 

Russia supplied an estimated 52 per cent of India’s crude oil imports in July, up from 48.6 per cent in June, according to an analysis by New Delhi-based think tank Global Trade Research Initiative (GTRI). India’s imports from Russia nearly doubled to $8.91 billion in July from $4.84 billion a year ago.

 

Commerce Secretary Rajesh Agrawal declined to comment on the tariff risk emanating from the US Bill, but said the two economies have been in regular contact and remain committed to what was agreed in February. The two sides had in February issued a joint statement on an initially agreed trade deal, whose terms are now under revision after the Supreme Court of the United States scrapped the reciprocal tariffs imposed by Trump.

 

“I think the Russia oil tariff Bill is a legislative process in the US that is underway. I don’t think I should comment on that. It’s their internal process,” Agrawal said. “We are engaged with the US on the trade deal and our contacts are regular. Both sides are committed to what was agreed in February,” he added.

 

Indian goods currently face an additional 10 per cent tariff in the US under Section 301 of the US Trade Act of 1974. The extra tariff may also rise following the conclusion of the US’ investigation into India over alleged excess capacity under Section 301. The Office of the United States Trade Representative is yet to release even a draft report of its findings in the probe.

 

Agrawal said New Delhi has so far been part of the process and has submitted its response. The commerce department will get another opportunity to submit its response after the draft report, he added.

 

According to the commerce secretary, the India-US deal, once concluded, is expected to address all future tariff concerns. “My sense is, in every deal, one of the key outcomes is predictability in trade relations. I think that endeavour will remain here as well,” he said.