‘India must rethink Russian oil purchases’: Nobel laureate Abhijit Banerjee links issue to US tariff removal

India must weigh whether discounted oil from Russia is worth the cost after the US sharply increased tariffs on Indian goods, Nobel laureate Abhijit Banerjee has said.

Last week, US President Donald Trump signed an executive order imposing an additional 25% duty on Indian exports in retaliation for New Delhi’s continued purchases of Russian crude. The hike, which takes effect August 27, raises total US tariffs on India to 50% — among the highest Washington has imposed on any country.

“We need to think hard about whether Russian oil imports are worth it, and then go back to the US to say, will they take the tariff off if we stop importing Russian oil,” Banerjee told PTI on the sidelines of an event at BML Munjal University.

The move could impact around $27 billion in non-exempt Indian exports to the US, fuelling speculation that India might scale back or halt Russian oil imports. India is currently the largest buyer of Russian crude, importing 1.6 million barrels per day in July. But refiners have placed no orders for August or September, as price discounts have narrowed to just $2 per barrel.

In FY25, India imported 88 million tonnes of Russian oil out of a total 245 million tonnes. Orders for August and September were already locked in before Trump’s August 7 announcement.

The tariff escalation comes amid a stalled US-India trade deal, with Washington demanding greater access to Indian agricultural and dairy markets. Banerjee suggested India could also revisit curbs on Chinese investment as part of wider trade negotiations, noting Beijing’s need to manage its own relations with the US.

On the broader economy, Banerjee painted a sobering picture, citing a struggling middle class, stagnant IT sector salaries, and weak private investment. “Not as good as we expected,” he said. “These are all issues we have not dealt with, and we are sitting on them.”

(With inputs from PTI)