Former RBI Governor and IMF Executive Director Urjit Patel has warned that punitive US tariffs are choking Indian exports, while cheap Russian oil is providing crucial support to India’s economy.
US Tariffs Slash Indian Export Growth
Patel said nearly 55% of India’s exports to the US are under punitive tariffs, hitting critical sectors hard. He explained that tariffs are not only high but also volatile, changing abruptly within months, which fuels investor uncertainty.
“These tariffs create real pain for exporters and make investment decisions unpredictable,” Patel stressed.
Despite the setback, Patel pointed out that the US controls just 13% of global trade. With 87% of trade outside US influence, India has significant room to diversify markets and deepen global partnerships.
Russian Oil Keeps India’s External Accounts Stable
Patel defended India’s continued purchase of discounted Russian crude oil. He argued that the benefit to India’s balance of payments is massive, far outweighing export losses from the US.
“Without Russian oil, India’s external position would be highly vulnerable. The cost savings are not just in billions—they are substantial and long-term,” Patel said.
India, the world’s third-largest oil importer, continues buying Russian crude under the G7’s price cap. Patel noted that many other countries also purchase Russian hydrocarbons, making sanctions inconsistent and uneven.
Sanctions Fuel Global Instability
Patel accused multilateral institutions of ignoring the economic shocks caused by sanctions. He called them a major driver of global instability, affecting not only sanctioned nations but also global supply chains.
“Sanctions are no longer just geopolitical tools. They have become a fundamental cause of global uncertainty,” he said.
India’s Balancing Act
Patel’s remarks highlight India’s balancing act: managing punitive US tariffs that squeeze exports, while leveraging discounted Russian oil to protect its external accounts. His warning also raises concerns about sanctions-driven risks to global economic stability.