NEW DELHI, Oct 19 : US President Donald Trump's waiver of Russian sanctions eases energy concerns for India, one of the top importers of Russian oil, and may improve the chances of New Delhi and Washington agreeing on a trade deal, besides helping overall ties.
An executive order issued by Trump on Friday waived key Russia-related US sanctions and tariffs — including duties on the country's goods and penalties for buying its oil and gas — that had been scheduled to start this week under the legislation known as the Graham Act.
Trump said the waiver was in the national interest of the United States.
The legislation would have exposed Indian goods to stiff tariffs of up to 100 per cent as India is one of the five largest importers of Russian oil and posed a challenge for the Asian nation's energy policies.
Prime Minister Narendra Modi's administration warned last month the new tariff measures on Russia could hurt bilateral ties, adding to diplomatic strain and trade uncertainty.
RUBIO SAYS TRADE DEAL 'VERY CLOSE'
US Secretary of State Marco Rubio, who arrives in India on Tuesday, said trade talks with New Delhi were a consideration for Trump's decision.
"We are trying to finalise a trade deal with India right now and we are very close to doing that. So, that's one of the things we take into consideration when the President makes a decision about national security waivers," Rubio told reporters in Uzbekistan on Monday.
India is the world's third-largest oil importer and consumer. Earlier this year, Russia accounted for nearly half of the country's oil imports, but purchases fell in August and continue to decline.
Persistently cutting Russian oil imports to avoid new US tariffs risks pushing up fuel prices ahead of regional elections in India, or straining government finances.
"For some countries it is very difficult to acquire energy from alternative sources," Rubio said.
Rubio's two-day visit to India will include a meeting with foreign minister S. Jaishankar on Tuesday to discuss bilateral cooperation, including energy, trade and investment, and defence.
A trade deal between India and the United States has been in the making for months but could not be finalised as talks stalled in part due to complications from the new tariff threat.
"The decision to pause on Russia sanctions could be the confidence-building measure that gives the two sides the negotiating space to get over the final hump," said Michael Kugelman, a senior fellow at the Atlantic Council in Washington.
A trade deal has also been held back because Washington is yet to complete a Section 301 trade investigation into several nations, including India, over alleged excess manufacturing capacity. Section 301 is a US trade law that allows retaliation against unfair foreign trade practices.
Earlier this month, India joined a US-led initiative to act against structural overcapacity, along with a few other nations.
Trade officials in New Delhi last week said an agreement with the US was nearly done and expressed optimism over securing a tariff lower than those of competing countries — a longstanding Indian expectation from the deal.
"It (the waiver) provides an important opening and at a critical moment" after renewed tensions over the sanctions bill and new US visa policies had put the relationship "in danger of falling into even harder times," Kugelman said.