India faces balancing act on Russia amid US trade talks

INdia testament feature to struggle with an progressively soft balancing act between negotiating a trade deal and repairing ties with the US and maintaining its legacy relationship with Russia ahead of a planned visit by President Vladimir Putin in December, people familiar with the matter said on Monday.The situation has been complicated by US President Donald Trump’s decision to sanction Russian oil giants Rosneft and Lukoil --- his first such action against Russia in his second term --- amid growing frustration with the lack of progress in his efforts to end the war in Ukraine. These sanctions are set to kick in on November 21, barely a fortnight before Putin is expected in India for an annual summit.With Indian refiners reviewing Russian oil purchases after the announcement of the sanctions, Reliance Industries, the top importer of Russian oil, has said it will adapt “refinery operations to meet the compliance requirements”.“There has been a reduction in Russian oil purchases but the possibility of it going down to zero looks unlikely,” one of the people cited above said on condition of anonymity.“The reciprocal tariffs isn’t so much of a problem as the 25% penalty over Russian oil purchases,” the person said, adding that it will be difficult for the Indian side to completely stop Russian energy purchases before Putin’s visit.The people, however, acknowledged that the guidelines of the US treasury department’s Office of Foreign Assets Control (OFAC) are very clear and can have significant consequences for Indian firms engaged in energy trade with Russia.“We do see energy trade coming down because we can no longer buy from Lukoil and Rosneft,” a second person said. “An option can be buying energy through companies that have no exposure to the West or from intermediaries.”Rosneft and Lukoil account for almost two-thirds of the 4.4 million barrels of Russia’s daily crude oil exports. Chinese, Indian and Turkish buyers currently account for a majority of Russia’s exports.While external affairs minister S Jaishankar met his US counterpart Marco Rubio and secretary (East) in the external affairs ministry, P Kumaran met the US assistant secretary for South and Central Asian affairs, S Paul Kapur, on the margins of the Asean Summit in Kuala Lumpur on Monday, there were no signs of forward movement on trade issues that have bedevilled India-US relations.“Appreciated the discussion on our bilateral ties as well as regional and global issues,” Jaishankar said on social media after his meeting with Rubio.Russian foreign minister Sergey Lavrov has also called off a planned trip to India in November, with the people cited above saying that Moscow is now eyeing a meeting between Lavrov and Jaishankar on the margins of the G20 Summit next month to prepare for Putin’s visit for the annual India-Russia Summit.Ajay Srivastava, founder of Global Trade Research Initiative (GTRI), noted that the US treasury department had blacklisted Rosneft and Lukoil, which account for almost 57% of Russia’s oil output, while the remaining 43%, produced by other firms, remains technically unsanctioned. “In theory, global buyers could keep purchasing from these non-sanctioned entities without violating US restrictions,” he said.However, he said this flexibility apparently doesn’t extend to India. “Washington has imposed an additional 25% tariff on Indian exports, accusing New Delhi of ‘fuelling the war’ [in Ukraine] by using Russian oil. No other country faces such a sweeping penalty,” he said.According to Srivastava, India faces the pivotal question of whether the 25% tariff over Russian oil purchases would be lifted if it stopped buying from Rosneft and Lukoil, or whether it must abandon all Russian oil to qualify for relief.“The difference is decisive. The first option aligns India with the letter of US sanctions, and the second demands full decoupling from Russia’s energy ecosystem — an impractical move for a nation that imports 85% of its crude,” Srivastava said.