In a sign of easing pressure on India, U.S. President Donald Trump said that trade talks with New Delhi were going well, and he could visit the country next year.
Trump who was speaking to reporters at the White House on Thursday said India “has largely stopped buying oil from Russia,” and if Prime Minister Narendra Modi extended him an invite, he would visit the country in 2026.
Evoking memories of his last visit to India, Trump called Modi “his friend” and a “great man.”
In the last few months, India and U.S. relations have been under stress, with experts warning of missing chemistry between the two leaders, leading to a disconnect between India-US ties.
Steep tariffs, $100,000 fee for H1B visas, and Trump’s repeated claims of having brokered a ceasefire between India and Pakistan and India’s purchases of Russian crude are among issues that have led to a deterioration of ties between New Delhi and Washington in recent months, according to experts.
India currently faces 50% tariffs on it exports, higher than the 47% duties on China.
“Negotiations between New Delhi and Washington D.C. are ongoing and both sides appear optimistic about trade deal being reached by the end of the year, possibly even in the next few weeks,” said Alexandra Hermann, head of Southeast Asia Research of Oxford Economics.
The tariff rate on Indian goods could be cut to 20% from 50% currently, putting India in comparable level to its Asian peers such as Vietnam, Thailand, or the Philippines, she said.
Hermann added that the baseline tariff on India “may not fall to Japan and South Korea’s level of 15%” due to sticking points around purchases of Russian oil, agricultural imports, and limited scope to commit to sizable investments in the U.S.
Last month, the U.S. imposed sanctioned on Russian oil majors Rosneft and Lukoil, which will come into force from Nov 21. As a result Indian and Chinese refiners have started to cut down imports of Russian oil.
According to a Reuters report on Thursday, Russian oil is trading at its steepest discounts to Brent in a year in Asia, as major Indian and Chinese refiners reduce purchases.
India’s Petroleum and Natural Gas ministry did not immediately respond to CNBC’s query on the country cutting Russian oil imports.
“Over the long term, completely phasing out Russian oil isn’t realistic for India,” said Prateek Pandey head of APAC oil and gas research at Rystad Energy, adding that as Russian crude becomes available at a sharper discount “New Delhi’s approach of “economics first” will be tested more than ever.
Source: CNBC