India-US Trade Battle: GTRI's 3-Step Plan to Avoid Sanctions and Tariffs

According to GTRI, India must first end oil imports from sanctioned Russian firms such as Rosneft and Lukoil to avoid exposure to secondary sanctions that could cripple financial and digital systems.

Second, once these imports cease, India should press Washington to withdraw the punitive 25 per cent "Russian oil" tariff imposed on Indian exports.

Finally, trade negotiations with the US should resume only after tariffs return to normal levels, and strictly on fair and balanced terms.

"End oil imports from sanctioned Russian firms to avoid secondary sanctions. Press Washington to withdraw the punitive 25 per cent "Russian oil" tariff once those imports stop. Restart trade negotiations only after tariffs normalise--and only on fair, balanced terms," the GTRI added in its note.

On October 24, government officials stated that India and the US are "very near" to finalising the first tranche of the ambitious Bilateral Trade Agreement (BTA).

The call for a sequenced approach comes amid rising tensions following Washington's October 22 sanctions on Rosneft and Lukoil, which together account for 57 per cent of Russia's crude output.

The move has placed India in a difficult position, as these sanctions threaten not just trade but also access to vital financial and digital infrastructure.

The impact of US measures has already been severe. Since the introduction of the 25 per cent "Russian oil" tariff on July 31, total duties on Indian goods have doubled to 50 per cent, leading to a 37 per cent fall in exports between May and September.

The note added that the secondary sanctions now pose broader risks. They can block access to the SWIFT payment network, freeze dollar transactions, and cut off digital services crucial for refineries, ports, and banks.

GTRI warns that while tariffs directly hurt exporters, sanctions have the potential to paralyse operations by targeting digital and financial systems.

Once imports from sanctioned companies end, GTRI argues that India should demand the withdrawal of the "Russian oil" tariff, since the sanctions cover only about 57 per cent of Russia's output and the blanket tariff applies even to non-sanctioned producers. Removing the tariff would halve India's US duty burden--from 50 per cent back to 25 per cent, and help restore export competitiveness.

GTRI further added that India should target parity with major partners such as the European Union, seeking average industrial tariffs of around 15 per cent and duty-free access for select export sectors, including textiles, gems and jewellery, and pharmaceuticals.

- ANI