Trump Tariff war against India for its Russian oil purchases could have an intended but indirect fallout on the fortunes of Reliance Industries Limited, forcing it to source its oil purchases from different countries.
International media is speculating that one of the fallouts of Trump’s proposed punitive tariffs on Indian exports could be seen as the US President’s bargaining chip for ongoing talks for a trade agreement between the two countries.
But investigations by the Financial Times have revealed that the RIL gained immensely in windfall profits through the cheaper Russian oil deals. In its report, the paper said that the company was now facing global scrutiny on this issue and added that RIL was the biggest beneficiary of cheap Russian crude.
Quoting experts, it said, the company had a contract to buy 500,000 barrels of crude a day from Russia. As per its estimates, the company’s FY2024–25 revenues rose to $71.7 billion, up from $57.2 billion in 2021–22, insinuating that the profits came from cheaper Russian oil.
However, RIL reportedly denied the suggestion and said, “It would be incorrect to attribute profits to one source of crude oil.”
Now, the paper puts a figure to the assertions made by US President Donald Trump that he was putting punitive tariffs on India for its oil purchase deal with Russia that helped finance the ongoing Ukraine war.
Denying these charges vehemently, India insisted that “oil purchases from Russia is its moral duty to reduce its oil import bills in the overall interests of the country and its people. External Affairs Minister S Jaishankar has defended the decision and said, “Our imports are based on market factors and done with the overall objective of ensuring the energy security of 1.4 billion people of India. “It is extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest,” the MEA also said in a statement.
But when it came to the Russian Oil deal, the Financial Times reported that RIL and a few other companies bought crude worth nearly & 140 bn and processed it into diesel and petrol for marketing in domestic and foreign markets. It said that RIL processed more Russian crude than other companies.
Downplaying these allegations, the RIL is quoted as having said that “only 30 percent of its crude processed at its plants was from Russia, and its profits depended only on product pricing, and it would be incorrect to attribute its profits to only oil purchases from Russia. India has, over the last few years, emerged as the largest buyer of oil from Russia, the FT said.
While RIL is under global scrutiny, another Reliance firm, ADAG, owned by Anil Ambani, is also facing trouble, but from central agencies in India. It is being investigated for money laundering and bank fraud charges. The Enforcement Directorate has already summoned Anil Ambani and his senior associates to join the probe.
But, Trump’s trade war with India is occupying the centre stage of the discourse over his charge that India was financing Russia’s Ukraine war. On Wednesday, he doubled tariffs on India’s exports to 50 percent, as a punitive step to force India to fall in line.
Historically. Before Russia’s Ukraine invasion, India sourced most of its oil from the Gulf and the US, but after the war broke out and Russia offered cheaper oil in the global market in February 2022, India became one of the prominent customers, the FT report said.
America, which has not made any noise on Russian oil purchases in the past, has suddenly raked this issue up.
This is seen by former SICCI president and international trade analyst Ramachandran Ganapthi as a “possible bargaining chip for America in the bilateral trade agreement that is in the works.” It is also to be seen as to whether Trump, “who vacillates like a yo-yo, will stick to his threats, or “slides down as a practical businessman that he is,” Ramachandran added. Washington has been pressing for many concessions, which the Union government has been resisting.
In fact, Prime Minister Narendra Modi has unequivocally declared that India will do nothing against the interests of its farming community and fisherfolk. He was speaking in response to the Trump Tariffs and asserted that India will stick to its policy of swadeshi to protect the interests of the farmers.
