Washington. US President Donald Trump has postponed his intention to impose 100% tariff on India. Under the 'Lindsey Graham Law', stringent sanctions were to be imposed on five countries including India buying oil and gas from Russia, which Trump stopped before the deadline of October 18. This stance of Trump has given India a double lifeline to maintain its energy security and protect its exports in the American market.
Trump, in an executive order Friday night, waived the sanctions, restrictions and tariffs imposed under the Lindsey O'Graham Sanctioning Russia and Iran Act. This step has been taken a few days after an agreement was signed with Russia regarding the supply of diesel to the US and global markets. At the same time, Trump said in his order that giving this exemption at this time is in the national interest of America. However, US MP Richard Blumenthal criticized the move, saying the exemptions were aimed at appeasing Vladimir Putin.
Decision just before Rubio's visit to India
The US Congress passed the Graham Act on September 16. Under this law, Trump got the right to impose up to 100 percent duty on goods coming from India, China, Slovakia, Hungary and Azerbaijan, the five largest countries importing crude oil or gas from Russia.
US Secretary of State Marco Rubio is proposed to visit India between October 17 and 22. Now talks on trade, defense and energy partnership between the two countries will take place in a positive environment. External Affairs Minister S Jaishankar had expressed concern over the Act when he met Rubio in New York last month.
What will be the benefit to India?
Unrestricted purchase of cheap oil: India will be able to continue purchasing oil from Russia. Russia's share in Indian oil imports in August was 44%. This discount is important in keeping prices stable in the domestic market.
Loss Avoidance:
If the law had been implemented, up to 100% punitive tariff could have been imposed on Indian goods going to America. The decision has saved Indian exporters from potential losses. With the postponement of the ban, the risk of derailing the ongoing bilateral trade negotiations between India and America has also been eliminated.
Trump also has compulsion:
Before the midterm elections in America, rising diesel prices had put pressure on the Trump administration. America itself has signed an agreement to purchase diesel from Russia. In such a situation, how could he stop India?
Temporary relief to India from Trump's exemption
Think tank GTRI on Saturday said that the exemption given by US President Donald Trump from sanctions, restrictions and tariffs under the 'Graham Sanctioning Russia and Iran Act' (SRIA) can provide only temporary relief to India, but it will not provide any permanent certainty. The think tank said that in such a situation, New Delhi should protect its energy security and continue buying oil on commercial terms.
GTRI said the legislation still reserves the right for Washington to reimpose the tariffs. According to him, this exemption has no fixed expiry date and can be withdrawn anytime. According to him, the US Trade Representative will continue to monitor Russian energy purchases. This may give the US administration an opportunity to review this exemption and reimpose additional tariffs if needed.