A Double Bind for India: Putin’s War and US Tariffs

The meeting between Indian Prime Minister Narendra Modi and Russian President Vladimir Putin on the sidelines of the Shanghai Cooperation Organization summit has yielded a diplomatic stance from New Delhi that walks a fine line. Modi’s entreaty to end the Ukraine war and cease hostilities comes as the United States threatens India with tariffs on its oil imports from Russia.

India’s reliance on Russia is substantial: Russian crude accounts for over 50% of India’s oil imports, and between April and July, Russian exports to India rose to over $34 billion, up nearly 60% from last year. This economic reality creates a double bind for the Modi government.

On one hand, India has thus far been cautious in its diplomatic efforts to distance itself from Russia’s actions in Ukraine. New Delhi has abstained from UN votes condemning Russian aggression and continued to trade with Moscow despite international sanctions. However, this stance is now being put to the test as the US threatens to impose up to 100% tariffs on countries that purchase significant amounts of Russian oil or gas.

The proposed U.S. bill aims to reduce India’s dependence on Russian crude by encouraging it to import Venezuelan oil instead. However, Venezuela’s oil industry is struggling with years of underinvestment and mismanagement, making it uncertain whether Indian refineries can efficiently process its output.

India’s energy trade with Russia raises questions about the long-term implications for its economy. As the world’s third-largest oil consumer, India relies heavily on imports to meet its energy needs. Any disruption to this supply chain could have far-reaching consequences, including inflationary pressures and a hit to economic growth.

Modi’s appeal to Putin takes on a new significance in this context. It is not merely a humanitarian gesture but also a pragmatic attempt to mitigate the risks associated with US tariffs. By urging an end to hostilities in Ukraine, Modi may be seeking to ease international pressure on India to choose between its economic interests and its diplomatic obligations.

However, this strategy comes with its own set of risks. If India fails to adhere to the US demands, it could face significant economic costs, including potential disruptions to its energy supply chain. On the other hand, if it accedes to US pressure and reduces its dependence on Russian crude, it may be seen as abandoning a key partner in the region.

As the international community continues to grapple with the consequences of Russia’s actions in Ukraine, India finds itself caught in the middle. Its diplomatic efforts to balance competing interests have thus far yielded mixed results, but one thing is clear: the country will need to navigate this complex web of alliances and economic interests with great care if it hopes to emerge unscathed.

The stakes are high for Modi’s government, which has already faced criticism from opposition parties for its handling of the Ukraine crisis. Any misstep could have far-reaching consequences not just for India but also for the region as a whole. As the US tariff threat looms large on the horizon, New Delhi will need to demonstrate greater diplomatic finesse and economic agility if it hopes to avoid becoming collateral damage in the great power rivalry playing out in Ukraine.

Modi’s words to Putin may ultimately be seen not just as a plea for peace but also as a warning to himself: India’s double bind with Russia is about to get a whole lot tighter.