US Russia Act: India Unlikely to Be Impacted, Experts Say

The proposed US Sanctioning Russia Act (SRA), which could impose tariffs on top purchasers of Russian crude oil and gas, is unlikely to pose a significant concern for India. This assessment comes from Neeraj Kaushal, a Professor of Social Policy at Columbia University, who highlights the numerous hurdles the legislation faces.

The SRA aims to grant the US President authority to levy tariffs of up to 100% on the top five global purchasers of Russian crude oil and gas. This measure would primarily affect countries like India and China.

Navigating Legislative and Political Obstacles

The path for any bill to become law in the US legislative process is notoriously challenging, often described as Darwinian, with a very low success rate. The SRA is no exception, facing considerable internal resistance.

• The Trump administration has shown inconsistent support and opposition to the bill.
• A recent suggestion by former President Trump to revise the bill to include Iran, potentially renaming it the ‘Sanctioning Iran and Russia Act,’ could effectively prevent its passage.

Key figures within the Trump administration also express reservations about tighter sanctions on Russian oil. Treasury Secretary Scott Bessent, for instance, opposes such measures due to broader economic implications.

• Concerns include a potential rise in global crude prices.
• There are also worries about the weakening of the dollar’s dominance if nations increasingly conduct transactions in alternative currencies.

Strategic Exemptions and Global Energy Shifts

The proposed legislation incorporates significant waiver provisions that would exempt many European countries. These nations would not face tariffs if their purchases of Russian natural gas constitute less than 15% of their total gas imports.

European nations have already taken steps to diversify their energy supplies following Russia’s invasion of Ukraine. This strategic shift has reduced their overall reliance on Russian energy resources.

India’s Path Forward Amidst Uncertainty

Despite the current bill’s lack of traction, the Trump regime has historically implemented similar policies without direct congressional approval. Should additional tariffs be imposed, China is anticipated to respond with comparable tariffs and potentially restrict exports of rare earth minerals.

India, lacking a similar retaliatory instrument, is advised to pursue a two-pronged strategic response. This involves diversifying its crude oil sources to mitigate vulnerability and accelerating its transition to renewable energy.

• Expand electrification initiatives across the country.
• Actively promote e-mobility solutions to reduce fossil fuel dependence.