India Better Off Risking US Market Access Than Abandoning Russian Oil
Political economist Gautam Sen argues India must prioritize energy security from Russian oil even if it risks losing access to the US market.
In a high-stakes geopolitical tug-of-war, India may have to choose between its most vital export market and its most critical energy source. According to political economist Gautam Sen, the nation would be better off accepting the risk of losing some access to the United States than abandoning its purchases of Russian oil.
Speaking to ANI, Sen, a former faculty member at the London School of Economics, framed the dilemma as a choice between "two evils." He argued that while the US remains India's largest merchandise export destination, the economic fallout from a disruption in energy supplies would be far more devastating to the Indian economy.
The High Cost of Energy Insecurity
India's dependence on imported crude oil is a massive vulnerability, with the country relying on imports for nearly 90 per cent of its requirements. Sen warned that halting Russian oil purchases would trigger a chain reaction of economic instability.
"If India stops purchasing Russian oil, it will be extremely consequential for India because the prices will rise in the global market," Sen explained. He noted that forcing Indian refiners to seek alternative supplies in an already tight global market would inevitably drive up energy costs, impacting inflation, the rupee, and the broader macroeconomic landscape.
A Deadlocked Trade Relationship
The tension between New Delhi and Washington is not just about oil; it is deeply embedded in complex trade negotiations. While India and the US have worked toward an interim trade agreement—involving tariff reductions on US industrial and agricultural goods—Sen believes the relationship has hit a wall.
Despite "substantial progress" noted during US Trade Representative Jamieson Greer's visit to New Delhi in June, Sen suggests that negotiations have reached a stalemate. He noted:
- Trade Concessions: India has already made significant concessions to the US, yet Washington may remain difficult to satisfy as long as the Russia connection persists.
- The Impasse: "It is now deadlocked. But deadlocked does not mean forever," Sen remarked regarding the current state of trade talks.
- The Core Conflict: The fundamental issue is how India can deepen economic ties with the US without compromising an energy strategy built on affordable imported crude.
The Economic Stakes
The numbers involved in this geopolitical gamble are staggering. According to the Department of Commerce's Trade Intelligence and Analytics portal, the United States is India's largest merchandise export market, accounting for approximately 20.75 per cent of all exports, valued at over USD 92 billion.
However, the Petroleum Planning and Analysis Cell data highlights the gravity of the energy side of the equation. With crude oil import dependence sitting at roughly 88 per cent, the cost of energy is not just a business concern—it is a matter of national economic survival. For New Delhi, the decision rests on whether it can weather the potential loss of American market access to ensure the lights stay on and the economy remains stable at home.