India tries to balance US, Russia ties in pursuit of Trump deal

NEW DELHI – India is trying to find a way to maintain ties with both the US and Russia as it seeks to clinch a trade deal with President Donald Trump and bring down tariff rates of 50 per cent. 

Mr Trump said on Oct 15 that Prime Minister Narendra Modi indicated India would

stop buying oil from Russia

, a key demand of the US president.

Unlike previous denials, New Delhi’s response on Oct 16 was lukewarm. Without mentioning Mr Trump or Russia, India signalled it would buy more US oil while continuing to secure supplies that are cost-effective for consumers.

The latest developments show Mr Modi’s tricky balancing act between the US, India’s biggest export market, and Russia, a longstanding military and strategic partner.

India imports about a third of its oil from Russia, and New Delhi has argued that a complete halt in purchases without access to other cheap sources would be unfeasible. 

“India needs the trade deal with the US and it needs energy access at reasonable prices,” said Mr Ashok Malik, a partner at the Asia Group. “Economic statecraft would require Indian diplomacy to achieve both. And that is what India’s trying to do.”

Indian refiners are expecting to reduce their purchases of Russian energy and buy more liquefied petroleum gas, showing a willingness to work with Washington.

A top trade official in New Delhi also said this week India could increase oil imports from the US by as much as US$15 billion (S$19 billion). 

Mr Trump had been publicly lambasting India for months for buying Russian oil, which he said was helping President Vladimir Putin fund his war in Ukraine, thereby undermining Western efforts to resolve the conflict. 

The US leader took a more conciliatory approach this week, saying while Mr Modi gave him assurances India would halt its purchases of Russian oil, it couldn’t do so immediately. India could also resume buying once the war is over, he said. 

Mr Modi and Mr Trump have spoken at least twice in recent weeks, with the two leaders discussing progress on trade negotiations in their call last week.

A team from New Delhi is currently in the US to discuss the trade deal, hoping to secure an agreement as early as November, Bloomberg News reported earlier this week.

“The narrative has seen a sharp turnaround from where we were two months ago when it seemed like the talks have broken down,” said Ms Shumita Deveshwar, chief economist at GlobalData.TS Lombard. “There’s definitely hope now that some sort of deal will be made.”

India became a major importer of Russian crude after the start of the war in Ukraine in 2022, and has been able to scoop up deliveries at discounts. Purchases of Russian oil fell slightly in September, but still made up one-third of India’s overall imports in spite of the US push to curb flows.

“I don’t expect a material drop in India’s Russian imports in the short term,” said Mr Vandana Hari, the founder of Singapore-based market analysis firm Vanda Insights. 

Mr Trump’s

announcement of another meeting with Mr Putin

is also being eagerly watched by the Indian government. Any potential thaw between the two major powers will give Mr Modi greater flexibility in maintaining defence and energy partnerships with Moscow while deepening trade and strategic cooperation with Washington. 

“Everyone is talking to everybody and that’s what diplomacy is about,” Asia Group’s Malik said. “And we are in a very volatile world where frankly it’s each one for himself.” BLOOMBERG