New Delhi: Former Finance Secretary Subhash Garg has sharply criticized the escalating tensions in US-India trade relations, stating that India has “effectively walked away” from negotiations due to the imposition of unilateral tariffs of up to 50% by former President Donald Trump. Speaking candidly about the accusations that India is “profiteering” from discounted Russian oil, Mr. Garg dismissed such claims as “political theatre, not economic reality,” emphasizing that the narrative of a massive $25 billion windfall is misleading.
According to Garg, a detailed report by CLSA indicates that India’s actual annual savings from Russian crude amount to only around $2.5 billion, far below the inflated figures cited in US political rhetoric. He further clarified that when shipping, insurance, and blending costs are accounted for, the effective discount per barrel is merely $3-4, well within the global price-cap framework. “Walking away from these purchases would not serve India’s interests,” Garg warned, adding that the country must continue to secure energy supplies efficiently without succumbing to external pressure.
On the broader trade front, Garg highlighted that the high tariffs imposed by the US, compounded by the slow progress of bilateral trade talks, have rendered meaningful negotiations nearly impossible. “No one can trade at those tariff levels,” he said. While urging that India should keep the door open to dialogue, he also called for introspection on India’s own negotiating stance, particularly in sectors like agriculture and consumer goods. He noted that inflexibility on issues such as GM oils and dairy has limited consumer choice, even when farmers’ interests are not directly harmed.
Turning to India’s economic engagement with China, Garg commented ahead of Prime Minister Narendra Modi’s meeting with President Xi Jinping in Tianjin that India’s restrictive approach to Chinese investment in critical sectors may have backfired. “We can’t do without semiconductors, solar cells, and EV batteries from China. Allowing targeted investment could reduce dependence over the long run. Our current policies have hurt us,” he said.
Finally, addressing calls for boycotting US goods in retaliation, Garg was unequivocal: “It’s insane. The US is deeply integrated into Indian consumption and services. A boycott is neither possible nor desirable.”
Mr. Garg’s comments underscore the complex balancing act facing India in its international trade relations, navigating pressures from global partners while safeguarding national interests and economic pragmatism.