Relief with strings attached

THE REAL TEST WILL BE WHETHER INDIA CAN SECURE A FINAL BTA THAT DELIVERS STABLE MARKET ACCESS

- AJAY SRIVASTAVA

Y ISSUING A joint statement on February 6, India and the US announced the framework for an interim trade agreement—an important step towards an ambitious bilateral trade agreement (BTA).

The details suggest a deal shaped less by mutual market access than by conditional relief from US trade pressure. Understanding its implications requires looking beyond headline tariff cuts.

US statements assert that India agreed to halt Russian oil purchases in exchange for a reduction in “reciprocal tariffs” from 50% to 18%. That understanding appears only in US communications—not in any language endorsed or signed by India. Instead, the US has issued a unilateral executive order stating it will monitor India’s oil purchases and reimpose higher tariffs if India is deemed non-compliant.

Tariff relief, in other words, is conditional on geopolitical behaviour that India has neither formally accepted nor publicly committed to.

The condition is economically significant. Russia was India’s largest crude oil supplier in fiscal 2025, accounting for roughly 35% of imports—about $50.3 billion. Replacing such volumes is neither quick nor costless, particularly when Russian oil exports of roughly seven million barrels per day are being pushed out of normal global trade flows.

The US is poorly positioned to fill this gap. Washington has secured oil-supply commitments from multiple partners: the European Union has pledged $750 billion over three years; Japan $7 billion annually in LNG; the United Kingdom a 10-year LNG contract starting in 2028; and countries such as Vietnam and Thailand have signed long-term deals extending to 2040. Yet despite high petroleum exports, the US continues to import more crude oil than it exports.