The easiest way to misread a trade negotiation is to treat it as theatre. What matters isn't the noise around a deal, but the numbers in it. Calling the India-US tariff arrangement a 'cave-in' - as Swaminathan S Anklesaria Aiyar does in his article, 'Cave-In, Not Breakthrough,' (Feb 11) on this page - confuses political rhetoric with economic reality.
Trade has always been intertwined with politics. But the balance has shifted. Tariffs act as leverage, sanctions reshape energy flows and supply chains are redesigned for resilience. In such a landscape, the relevant test isn't whether a country resists pressure theatrically, but whether it protects its core interests while adjusting intelligently.
Russian crude was a discounted commercial opportunity. When prices fell after the Ukraine war broke out, Indian refiners moved in because the margins made sense - and this aligned with western policy design. EU and G7 price caps were meant to keep Russian oil flowing while limiting Moscow's revenues, a dual objective the US stated plainly.
The goal was to avert a price spike while squeezing Russian earnings. Buyers like India were not undermining that system by purchasing capped oil. They were operating within it. India's petroleum ministry warned that removing Russian supply could increase prices to $120-140 a barrel.
Russian oil isn't sacred but conditional, its relevance determined by price and risk. Discounts once near $12 a barrel have narrowed to about $3. Trade now relies on opaque shipping and shadow logistics, raising insurance and compliance costs. European Commission is moving beyond the price cap toward broader maritime service bans, proposing restrictions that could redirect flows to India and China. As enforcement tightens and freight volatility rises, risk-adjusted delivered cost shifts.
Europe matters beyond sanctions headlines. The Netherlands is India's largest merchandise export destination in Europe, with refined petro products routed through Rotterdam. India doesn't just import crude, but it also refines and re-exports to European markets. As the EU tightens maritime and financial channels, compliance costs and insurance premia squeeze refinery margins.
So, sanctions 'plumbing' shapes downstream competitiveness, and rising freight, insurance and compliance risks force a reassessment of discounted crude in light of export exposure. So, the operative question isn't sovereignty, but whether the economics still justify the trade.
Tariff commitments being discussed centre largely on products India imports in rising quantities. Almond imports have grown from roughly $55 mn in 2018-19 to about $85 mn in 2024-25. Pistachios have risen from around $92 mn to over $200 mn in the same period. These are not subsistence crops. They are consumption goods driven by urban preference. Tariffs influence price, but they cannot manufacture...
An industry is threatened only when imported goods consistently land at prices lower than what domestic producers can match. A zero tariff does not make a sector unviable; it merely removes a price cushion. Where India has a genuine cost advantage, lower tariffs don't wipe it out.
Take dairy. Producing a kg of milk here costs roughly ₹60, compared with about ₹97.5 in the US and ₹123 in New Zealand. This is a sector that rests on cost advantage. Sensitive staples such as rice, wheat and maize remain outside the liberalisation envelope, so the core of the agricultural economy remains intact.
Even if one extends the argument to commodities traditionally deemed sensitive, such as wheat, maize, or rice, cold arithmetic in the backdrop of a weakening rupee suggests that India would not necessarily face a comparative disadvantage even under a zero-tariff framework. Exchange-rate dynamics, freight costs and domestic cost structures still matter, and zero duty does not translate into cheaper...
Animal feed
While concerns about Distillers Dried Grains (DDGs) and feed markets warrant attention, they aren't alarming. Larger imports could pressure domestic oilseed meals and soybean prices. Yet, India lacks a comparative advantage in soybeans vs Brazil or Argentina. Consumption is modest, and soybean oil is largely imported. Transitional pressures can be managed by diversifying into pulses, m...
Trade is inherently two-sided, and improved US market access could benefit high-value Indian exports such as coffee, spices and mangoes. Many of these sectors are regionally concentrated and developmentally significant, making access structural rather than symbolic. Much of the criticism centres on trade as leverage, but the more relevant question is how to respond in a world where major economies...
In such a world, prudence differs from pride. A country that buys discounted oil when it makes economic sense, protects sensitive farm sectors, adjusts at the margin where imports are entrenched and pursues export openings where it is competitive is not capitulating, it's is manoeuvring. National interest is not measured by volume of refusal, but by how effectively a country adapts without surrend...
Source Name : Economic Times