New Delhi: India is now in the spotlight in the United States as a new bill that was introduced in the United States Senate suggested a 100% tariff on nations that keep purchasing large quantities of Russian oil and gas. In addition to China, Slovakia, Hungary and Azerbaijan, India is included in the list of five countries mentioned in the proposal. It has already garnered the support of over 60 senators, including one of the most fervently watched bills in Washington.
The bill is a concept that’s easy to understand. US lawmakers think that Russia continues to make big bucks from oil sales, which are funding its war in Ukraine. They argue that to exert pressure on Russia’s purchasing countries would affect Russia’s revenues and make the energy exports less appealing. The plan doesn’t add to the sanctions against Russia, it targets its biggest energy customers.
So, what is the bill in fact saying?
The US President would be given the authority to impose a 100% import (tariff) duty on products entering the United States from the five biggest importers of Russian oil or gas. Basically, these products may cost much more in the United States. It would make it more difficult for exporters to compete and could drive up prices for American buyers as well.
The idea is not a novel one. A previous draft of the bill had proposed a tariff level of up to 500%, but the draft has now been lowered to 100%. The updated proposal is more feasible, but still sends a clear signal to those nations that refuse to stop purchasing Russian energy, supporters say.
India is mentioned in the Bill due to its considerable increase in buying Russian crude oil since 2022. Following the invasion of Ukraine, Russia started to sell oil at reduced prices. Indian refiners were buying more as the cheaper crude has reduced their import costs and met their increased energy needs. The Indian government has always insisted that its actions are driven by energy security, national interest, and not politics.
The new offer from New Delhi is wary. Ministry of External Affairs spokesperson Randhir Jaiswal said India is keeping a close watch on the developments. He added that India imports energy as per its requirements. The bill is yet to be discussed in the U.S. so there is no immediate effect on the trade and oil imports in India.
Additionally, it’s vital to keep an eye on the fact that the proposal has not yet been enacted. Although it is supported by both major political parties in the U.S. Congress, it still needs to be passed by the U.S. Senate and the U.S. House of Representatives. It must only be sent to the US President after this. The bill also does not automatically impose tariffs, even then, but leaves it up to the President to impose if necessary.
The bill if implemented, could have ramifications for Russia. India and the U.S. have a high trade relationship, with billions of dollars of trade passing between the two countries annually. A 100% tariff would drive up the cost of Indian products in the American market, impacting export industries in a variety of sectors. Meanwhile, Indian imports to U.S. companies could also be more expensive.
A few other things that have been noted with the bill is that there are some exceptions. The proposal includes some exceptions for imports of Russian uranium to the US and some “limited” purchases of Russian natural gas. The exemptions have been criticized because they question whether the rules will be applied in the same manner to all countries. However, supporters say the exceptions are necessary to help maintain America’s own energy security and interests.
The proposal is currently in discussion and has yet to go through a lengthy legislative process before it could be enacted into law. That hasn’t stopped it from causing controversy, however, due to its potential effect on world commerce, energy markets and trade relations between the United States and its potential trading partners, such as India. Now, the businesses, investors and policy makers will have their eyes on it and watch to see what changes are made and how it will proceed before a final decision is reached.