On July 30, US President Trump sent a message on the Truth Social digital platform that India and China were the biggest buyers of Russian energy “when everyone wants Russia to stop the killing in Ukraine”. In the coming weeks, top officials in Washington, DC, unleashed a series of vituperative and hostile messages before and after the imposition of 50 per cent tariffs on a substantial portion of India’s exports to the US, including cut-and-polished diamonds, jewellery, prawns and other seafood, garments, carpets and engineering products. Such high tariffs have not been imposed on any other major country except Brazil.
US Treasury Secretary Scott Bessent (who is like India’s finance minister), Deputy Chief of Staff at the White House (where the office of US president is located) Stephen Miller and Trade Adviser Peter Navarro, among others, have followed in Trump’s footsteps. Navarro has been particularly vituperative in his attacks on India for fuelling Russia’s “war machine”. As a consequence, ties between the two nations have deteriorated to a level unseen in recent decades. Ironically, some describe the US as the world’s “oldest” and India the “largest” democracy, even as the quality of democracy, by all accounts, has worsened in both countries.
Navarro wrote in the UK-based Financial Times that “India acts as a global clearing house for Russian oil, converting embargoed crude into high-value exports while giving Moscow the dollars it needs.” He has described India as a “laundromat” to support the Russian economy. Bessent said that some of India’s richest families are the biggest beneficiaries of deals with Russia, without naming Ambani, and that this was “unacceptable” to the US. Navarro posted on his X handle, claiming that “India buys Russian oil solely to profiteer”, that the country’s oil trade with Russia was killing Ukrainians and taking away American jobs.
Going beyond the high-pitched rhetoric, let us examine some of the facts. India currently imports almost 90 per cent of the country’s total requirement of crude oil; such imports comprise around a quarter of our total imports. Before the Ukraine war started in February 2022, between one-third and half of crude oil consumed in India was imported from West Asia (countries such as Iran, Iraq, Kuwait and Saudi Arabia) simply because the oil tankers had to cross the Arabian Sea to reach ports located on the country’s west coast. After the war, Russia slashed its prices to around half the rates prevailing in the international market. This made it economical for the oil to be shipped over much longer distances.
From barely 1-2 per cent of total crude oil imports, Russian oil comprised between 35 per cent and 45 per cent of India’s total imports by the middle of 2023. Of this amount, roughly half would be imported by two private refineries: the first is the Jamnagar refinery complex, part of Reliance Industries Limited, India’s largest private corporate conglomerate, headed by Mukesh Ambani; and the second is the refinery at Vadinar, owned by the Russian-owned Nayara Energy. Reliance calls the Jamnagar refinery the largest in the world; the second largest being the one at Vadinar, which was originally promoted by Essar Oil (controlled by the Ruia family) and then sold to Rosneft, Russia’s biggest government-owned energy group, and other entities with Russian links with the blessings of Vladimir Putin and Narendra Modi.
The remaining half of the Russian crude is imported by public-sector companies such as Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation. Needless to add, the lower prices of crude oil have not benefitted Indian consumers one bit while enriching the coffers of the government and the oil companies.
India’s crude oil imports from Russia were analysed by the Finland-based Centre for Research on Energy and Clean Air (CREA), with the findings quoted in a report by Megha Bahree in Al Jazeera on August 22. The report noted that Russian crude oil accounted for 3 per cent of the crude oil imported by the Jamnagar refinery before the war, and this proportion increased to around half in the following years before declining. This crude oil was refined and converted into products including aviation fuel, gasoline, diesel, and cooking gas. And guess which country was the biggest buyer of these products from the Jamnagar refinery? The answer, according to CREA, was the US.
CREA tracked hundreds of “shadow vessels” that transported between 60 per cent and 80 per cent of the crude oil produced in Russia to “beat the price cap” imposed by the sanctioning countries.
Hypocrisy knows no bounds when it comes to international trade. China is the biggest importer of Russian crude. But, given its economic clout, it can afford to cock a snook at the US and Trump can do precious little about it except make loud noises. The European Union is a major importer of natural gas from Russia. America’s double standards are there for all to see – it continues to import millions of dollars’ worth of uranium and rare minerals.
So, what is all this brouhaha all about? Why did Trump choose to humiliate Modi, who has hugged him tightly at every opportunity he got and who publicly declared five years ago, “Ab ki baar Trump sarkar”? Of course, India’s prime minister got it wrong on that occasion. Biden became the US president. Trump knows he can bully Modi and get away with it, and the reason is that India is not the vishwaguru, Modi claims it has become or will soon become. India’s prime minister is weaker and more insecure than he has ever been in the last 11 years. And Trump is exploiting this fact to the hilt.
The unfortunate part of the story is that those who will suffer the most will be the poor in India. The Chief Economic Adviser to the Government of India in the Union Ministry of Finance, V Anantha Nageswaran, has gone on record saying that the country’s gross domestic product (GDP) is expected to shrink by around 0.5 per cent this year. That is certainly bad news.
(Paranjoy Guha Thakurta is an independent journalist, author, publisher, maker of documentary films and music videos and a teacher)
