New Delhi: India remains committed to ensuring energy security for its 1.4 billion people and will continue to pursue it through diversified sources of supply, the ministry of external affairs (MEA) said on Thursday, shortly after the US parliament that empowers President Donald Trump to impose tariffs of up to 100% on countries buying Russian energy.
India flagged the potential impact of the US move on bilateral ties and global energy markets, while stressing its resolve to protect its economic interests.
“This issue has been discussed at high levels in recent months with various US interlocutors. Its potential implications for not just the bilateral relationship but also the international energy market have been very clearly articulated by the Indian side,” the MEA said in a statement.
India is determined to take all necessary measures to protect its trade and economic interests, and the government will work closely with domestic trade and industry bodies to deal with the implications of these developments, the ministry added.
The US House of Representatives has passed a bipartisan sanctions bill targeting Russia over the Ukraine war, giving Trump the power to slap tariffs on countries like India and China for their energy imports from Russia. The US Senate had already passed the bill.
“India has noted the passage of the Sanctioning Russia and Iran Act in the US Congress and that it’s monitoring further developments on this matter,” the MEA said.
The new American law comes at a time when global oil prices have already breached past the crucial $100-per-barrel mark in the wake of a fresh flare-up in the West Asia conflict, potentially impacting net energy importers and developing countries, including India. The US move is seen pushing up global prices further, potentially stoking inflationary pressure in these countries.
India imports about 90% of its oil requirements annually and Russia accounts for over a third of these purchases. India over 1.9 million barrels per day from Russia in August. Russia has emerged as a key supplier to India over the past four years after Moscow started offering discounts, making its oil not just viable but also attractive for Indian refiners, after accounting for logistics costs. However, the discounts have now drastically narrowed.
India’s total crude oil imports account for a quarter of its . Its crude import bill until July this fiscal jumped to $63.37 billion, up 56% from a year earlier. This was already more than half of its total oil import bill of $123 billion in the entire last fiscal year, partly reflecting the rise in global oil prices following the outbreak of the West Asia conflict in February. The November contract of the benchmark Brent crude oil is currently trading at around $105 per barrel.
Estimates by Bank of Baroda show that a persistent $1 increase in crude prices can raise the country’s annual import bill by around ₹18,000 crore.
Inflationary pressure has been building in the economy amid the volatility since the start of the war in West Asia earlier this year. In August, India’s retail inflation rose to a 20-month high of 4.82%, driven by higher fuel and food prices, taking it above the Reserve Bank of India’s medium-term target of 4% for a third consecutive month. Wholesale inflation also edged up to 9.92% in August from 9.78% in July, largely reflecting the price pressure in fuel.