A scheduled visit of the US trade negotiators to New Delhi for the sixth round of negotiations on a Bilateral Trade Agreement (BTA) has been called off, a senior official confirmed on Saturday, indicating that no tariff relief would be available for India in the near future.
“From their (US) side, the trade negotiations (are) halted, whether (this is) forever or temporary, there’s still no idea. They said they won’t come for the August 25 meeting,” the source added.
The visit of a US team, led by Assistant US Trade Representative Brendan Lynch, was to start from August 25 and go on till August 30. This was expected to be a key platform for both sides to mitigate the sudden escalation of trade tensions after US President Donald Trump doubled the additional tariff (over MFN rates) on India to 50%.
Rising Tariff Pressures
The cancellation of the visit of the US team would also mean that the first tranche of the BTA which in its full fruition, is conceived to cover several other areas apart from goods trade, may not materialise before the fall of the year, as originally planned.
The initial 25% levy, which came into effect on August 7, is described by the US as “reciprocal tariff” meant to address trade imbalance with India. Another 25% rate is a punitive one for India’s “continued purchases” of Russian crude oil, and this is slated to come into force by August 27.
The government of India had earlier called the punitive tariff “unfair and unreasonable,” with officials citing purchase of Russian goods by the EU, China and even the US itself.
India’s Firm Stand on Russian Oil
In his recent Independence Day speech, prime minister Narendra Modi made it clear that the country would not accept any agreement that is detrimental to the interests of its farmers and cattle rearers. At the same time, India has never formally closed the avenue for dialogue, the most structured one being the negotiations for BTA.
The official source quoted above asserted that India cannot stop buying oil from Russia given that it makes “a lot of difference in terms of money.” “We are buying more from (the US) than before, but we are still buying Russian oil. We can not stop (it),” the person added.
PTI reported Trump as telling Fox News on Friday that, “he (Russian President Vladimir Putin) lost an oil client, so to speak, which is India, which was doing about 40% of the oil. China, as you know, is doing a lot…And if I did what’s called a secondary sanction, or a secondary tariff, it would be very devastating from their standpoint. If I have to do it, I’ll do it. Maybe I won’t have to do it.” Trump said on Friday.
However, as reported by FE recently, India imported 1.8 million barrels per day of Russian oil in the first fifteen days of August even as a 50% tariff by the US looms over the country. This is even higher than the purchase of 1.6 million barrels per day in the entire month of July.
Trump made the comment as he was heading to Alaska for a summit with Russian president Vlaidmir Putin. The meeting of the two leaders concluded without any agreement on ending the Russia-Ukraine war.