US India Trade Deal 'Very Close' After Trump Waives Russia Sanctions

The United States and India are very close to a trade deal, Secretary of State Marco Rubio told reporters in Uzbekistan on Monday, after President Donald Trump waived Russia sanctions that had threatened to land on Indian exports within days. "We are trying to finalise a trade deal with India right now and we are very close to doing that," Rubio said. He added that the trade talks were one of the things the president weighed when he decided on the waiver.

The waiver, signed by executive order on Friday, set aside key Russia related sanctions and tariffs under the legislation known as the Graham Act. Those measures were scheduled to start this week. They included duties on Russian goods and penalties for countries that buy Russian oil and gas, and they would have exposed Indian goods to tariffs of up to 100 percent, because India is one of the five largest importers of Russian oil.

What was waived, and why it matters

India is the world's third largest oil importer and consumer. Earlier this year, Russia supplied nearly half of the crude India bought. Purchases fell in August and have kept declining, but they remain large enough that a sudden stop would hurt. Reuters reported that Prime Minister Narendra Modi's government warned last month that the new tariff measures could damage ties with Washington, on top of the trade uncertainty both sides have lived with this year.

The energy math is the heart of the story. If India cut Russian oil fast to dodge US tariffs, fuel prices at home could rise ahead of regional elections, or the government would have to spend more to hold prices down. Rubio made that point himself on Monday: "For some countries it is very difficult to acquire energy from alternative sources." Trump said the waiver was in the national interest of the United States.

The context: energy and chips now decide trade deals

This deal is being negotiated in the same week that China reported third quarter growth of 4.5 percent, built on exports of chips and electronics while its property sector shrank. Across Asia, trade talks now turn on two things: who sells the energy, and who sells the chips. The India talks fit the pattern. Washington wants a deal that opens Indian markets and shifts India's energy buying. New Delhi wants the tariff threat gone and its exporters, from textiles to pharmaceuticals to electronics, able to plan again.

Oil markets noticed before diplomats did. Brent crude fell 1.8 percent on Monday to about $107 a barrel after the waiver, because Russian barrels that might have been blocked can keep moving. That is the clearest sign traders expect the waiver to hold while talks finish.

What a deal would change for ordinary people

For Indian exporters, removing a possible 100 percent tariff is the difference between shipping and not shipping. For US buyers, Indian made goods from medicines to auto parts stay on shelves without a sudden price jump. For Indian drivers, the waiver takes away the immediate risk of a fuel price spike caused by a forced switch away from discounted Russian crude. None of that is final until a text is signed, and neither side has published terms.

What happens next

Rubio arrives in India on Tuesday, on a regional trip that takes him to Mumbai and Jamnagar, the refining hub at the centre of India's Russian oil trade. His visit is the obvious place for the last details to be settled in person. Watch for three things: a joint statement with dates, any wording on how much Russian oil India will keep buying, and whether the waiver gets a fixed review period. Rubio said on Saturday that the president would take up to 60 days to assess the economic impact of the waiver, which sets a clock on whatever comes next.

Key numbers

• Tariff risk removed for now: up to 100 percent on Indian goods under the Graham Act penalties
• India's rank among oil importers: third largest in the world
• Russia's share of India's oil imports earlier this year: nearly half, falling since August
• Brent crude on Monday: down 1.8 percent to about $107 a barrel after the waiver
• Review window Rubio cited for the waiver: up to 60 days