US Treasury Chief Criticizes India’s Russian Oil Purchases

US Treasury Secretary Scott Bessent publicly criticized India on August 19, 2023, for allegedly profiting from its increased purchases of Russian oil amid the ongoing conflict in Ukraine. Bessent stated that Washington views this practice as unacceptable, emphasizing that Russian oil now constitutes 42 percent of India’s total oil imports, a significant rise from less than 1 percent prior to the war.

In contrast, he noted that China’s imports of Russian oil had only increased modestly from 13 percent to 16 percent. Bessent accused India of engaging in what he termed “Indian arbitrage,” where cheap Russian oil is acquired and then resold as refined products. He remarked, “What I would call Indian arbitrage… has just sprung up during the war, which is unacceptable.”

Tariffs and US-India Relations

The escalation of tensions between the United States and India has been further fueled by recent tariffs imposed by the US government. President Donald Trump announced a new 25 percent tariff on Indian goods this month, which, combined with previous duties, now totals 50 percent since his administration began. Trump claims these tariffs are aimed at increasing pressure on Russian President Vladimir Putin to end the conflict in Ukraine.

Despite the focus on India, Bessent highlighted a difference in the approach towards China, stating that the situation was “completely different.” He noted that China has been a long-term buyer and has not participated in the same kind of oil arbitrage as India.

The ongoing tariffs have strained relations between the US and India, which had previously been optimistic regarding a potential trade agreement with Prime Minister Narendra Modi‘s government. Such a deal was anticipated to lower tariff rates, but negotiations have stalled without a breakthrough.

Recent Developments in Trade Policies

On the same day as Bessent’s remarks, India announced a temporary suspension of an 11 percent import duty on cotton, effective until September 30. This move is perceived as an effort by New Delhi to address US concerns regarding agricultural tariffs. It follows the abrupt cancellation of a scheduled visit by US trade negotiators to India, originally planned for August 25 to 29.

As both nations navigate through these complex issues, the focus remains on finding a resolution that addresses economic concerns while maintaining diplomatic relations. The future of US-India trade relations hangs in the balance as both sides assess their positions in light of these developments.