05 August 2025
(Mains: Editorials Simplified)

TRADE TENSIONS: TARIFFS, RUSSIAN OIL, AND STRATEGIC AUTONOMY

Recent tensions between India and the United States have flared following the announcement of increased tariffs by the U.S. President, citing India’s trade with Russia and protectionist policies. These developments reflect a larger trend of geopolitical power play where trade, energy security, and foreign policy intersect, raising concerns about India's economic diplomacy and autonomy.

Understanding Key Concepts and Background

• Tariff: A tax imposed by a country on imported goods. Such tariffs are paid by domestic importers, not by the exporting country. It leads to increased cost of the imported goods and thus loss of competitiveness.

• Non-Tariff Barriers (NTBs): Regulatory measures such as licensing, standards, and quotas that restrict imports or make them difficult, often cited by U.S. as India’s trade barriers.

• Strategic Autonomy: India’s long-standing principle of conducting foreign policy independently without being swayed by the interests of global powers.

• Energy Security: The uninterrupted availability of energy sources at an affordable price. India’s oil imports from Russia are part of this effort, especially amid global disruptions due to war.

Emergent Issues

• Unilateral Action and Disruption of Trade Normalcy

  • The U.S. decision to impose a 25% tariff targets India selectively and raises questions about the consistency of American trade policy.

  • Tariffs disrupt global value chains and undermine multilateral trading principles upheld by the WTO.

• Implications for India’s Export Competitiveness

  • Higher tariffs make Indian goods less attractive in the U.S. market, particularly compared to competitors like Vietnam and Mexico that enjoy better trade terms.

  • This can hurt MSMEs and labour-intensive industries dependent on exports to the U.S.

• Allegations of Profiteering from Sanctioned Trade

  • India is accused of purchasing discounted Russian oil and allegedly reselling it, although India maintains that these purchases are for domestic consumption and vital for affordable energy.

  • This narrative, if unchallenged, could harm India’s image and invite unjust scrutiny or economic sanctions.

• Hypocrisy and Strategic Exceptionalism by the West

  • The U.S. and EU continue to engage in significant trade with Russia (e.g., LNG, uranium, palladium), even while criticising India’s oil imports.

  • This raises the issue of selective moralism, where geopolitical alignment often overrides uniform standards of conduct.

• Challenge to India's Strategic Autonomy

  • Attempts to coerce India into aligning its trade and energy choices with Western interests may infringe upon India’s sovereign decision-making.

  • This is especially critical when India's actions are guided by economic compulsions rather than political intent.

Navigating the Way Ahead

• Engagement through Strategic Dialogue

  • India must deepen engagement with the U.S. through institutional platforms like the Trade Policy Forum to resolve disputes without escalation.

  • Clear articulation of India’s economic compulsions and non-alignment strategy can build mutual understanding.

• Leveraging Multilateral Forums

  • India should invoke WTO mechanisms if unilateral tariff hikes are unjustified under international trade law.

  • Active diplomacy at G20, BRICS, and SCO can help counter negative narratives and build coalitions against unilateral sanctions.

• Diversifying Export Markets

  • Reducing over-dependence on select markets like the U.S. by expanding trade ties with Africa, Latin America, and ASEAN can reduce vulnerability to punitive actions.

  • Signing more FTAs (Free Trade Agreements), such as with the UK and UAE, will help absorb market shocks.

• Strengthening Energy Resilience

  • India should invest in renewable and domestic energy capacities to lessen dependence on volatile foreign sources.

  • Meanwhile, continue purchasing oil based on affordability and strategic interest, as per its energy security doctrine.

Conclusion

India’s global economic posture is increasingly tested by geopolitical fault lines where trade is used as an instrument of power. The recent U.S. tariffs and pressure over Russian oil imports exemplify these complexities. A calibrated response, based on strategic autonomy, multilateralism, and economic diversification, is essential to preserve India’s long-term interests in a fragmented global order.

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RETHINKING INDIA’S MYANMAR POLICY

India’s response to Myanmar’s ongoing internal crisis has remained cautious and largely strategic, prioritising security and geopolitical considerations over democratic ideals. There is a need to re-evaluate India’s policy through the lens of regional stability, human rights, and long-term diplomatic influence.

Context and Background

• Myanmar’s military (Tatmadaw) seized power in February 2021 by overturning a democratically elected government, sparking nationwide resistance and civil conflict.

• India shares a 1,600 km border with Myanmar and has historically followed a dual policy – engaging with both the military regime and democratic forces.

• The rationale has been to secure India’s strategic and security interests in the North-East, counter China’s expanding influence, and maintain connectivity under the Act East Policy.

Core Concerns in India’s Current Policy

• Narrow Strategic Lens: India's engagement remains heavily militarised and focused on border security, insurgency control, and infrastructure connectivity, overlooking Myanmar’s internal democratic aspirations.

• Moral Deficit in Foreign Policy: Continued engagement with the junta despite its repressive actions raises questions about India’s commitment to democratic norms and human rights.

• Undermining Soft Power: By not supporting pro-democracy forces, India risks losing the goodwill and influence it once enjoyed among Myanmar’s civil society and political opposition.

• Humanitarian Disconnect: The halt of the Free Movement Regime and attempts to fence the India-Myanmar border have impacted refugee management and cross-border humanitarian efforts.

• Legal and Ethical Lapses: Deportation and detention of asylum seekers in violation of non-refoulement principles go against India's long-standing tradition of hosting refugees.

Way Forward

• Leverage Democratic Credentials: India should actively engage with Myanmar’s pro-democracy alliance – including the National Unity Government and ethnic groups – through diplomatic recognition, institutional dialogue, and capacity-building programmes.

• Promote Federalism as a Model: India can offer constitutional and federalist insights to Myanmar’s opposition that seeks to move away from military-dominated governance towards a more inclusive and decentralised framework.

• Humanitarian Diplomacy: Establish formal humanitarian corridors along border states such as Mizoram and Manipur. Aid can be routed through non-governmental networks with pre-screening mechanisms to ensure security compliance.

• Adopt a Dual-Track Engagement: Maintain minimal functional ties with the regime where necessary but simultaneously scale up outreach to democratic actors, as other regional democracies like Japan and Thailand have attempted.

Conclusion

India’s long-term interests in Myanmar – security, connectivity, and regional influence – can be better protected by aligning them with democratic values and human security imperatives. A calibrated, progressive foreign policy that blends strategic caution with normative leadership can help India emerge as a responsible regional power.

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