A high-stakes and increasingly tense diplomatic standoff is underway between Washington and New Delhi, as a landmark trade deal between the two powerful nations is being held hostage by a single, intractable issue: India’s continued purchase of Russian oil.
While both sides are publicly describing their latest round of negotiations as “constructive,” it has become abundantly clear that the path to a deal runs directly through Moscow.
A diplomatic deadlock, a punishing price
In a series of tense meetings in Washington this week, US trade negotiators made their position unequivocally clear: resolving the Russia issue is the absolute prerequisite for reducing the punishing tariffs currently crippling Indian exports and sealing a final trade agreement.
According to a person familiar with the private discussions, while the talks were positive, they failed to produce any significant breakthroughs on this core point of contention.
The stakes are incredibly high.
Last month, President Donald Trump, in a move that stunned New Delhi, doubled the tariffs on Indian goods to a crushing 50 percent, directly accusing the country of helping to finance Vladimir Putin’s war in Ukraine.
The US has reiterated that the 25 percent penalty on India is designed to “deter countries from supporting the Russian economy through oil revenue.”
India’s government, in turn, has struck a defiant tone, calling the US actions “unfair, unjustified and unreasonable.”
A king’s ransom in concessions
Faced with this diplomatic deadlock, the Indian delegation, led by Commerce Minister Piyush Goyal, has come to the table with a king’s ransom in concessions.
According to people familiar with the matter, New Delhi is considering roughly 40 billion dollars in big-ticket purchases from the US, including advanced defense hardware and energy goods.
India has also offered to ease some of its long-standing restrictions on the import of genetically modified corn and non-core dairy products.
Goyal confirmed that India was willing to buy more energy from the US “in the years to come,” a clear and public olive branch to the Trump administration.
A complicated chessboard
But even as India offers these powerful incentives, the negotiations are being complicated by other factors.
The Trump administration’s recent crackdown on the immigration of skilled workers—a set of rules that will disproportionately impact Indian nationals—has added another layer of tension to the talks.
In a bold and revealing counter-move, Indian officials have also conveyed a stark choice to their American counterparts.
As Bloomberg reported on Thursday, any significant reduction in Russian oil imports would require a major concession from Washington in return: the US would have to allow India to resume crude purchases from the sanctioned suppliers of Iran and Venezuela.
The negotiations, it seems, are not just about a simple trade deal. They are a complex and high-stakes game of geopolitical chess, with the fate of a decades-long alliance hanging in the balance.
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