Transactions for Russian oil resulted in Indian businesses earning an estimated $16-bn (Rs1.40 lakh cr) in excess profits

By this time, the nation probably knows the cost of Trump’s 50 per cent tariffs, which came into effect two days back, from Aug 27. While a lot by way of analysis and impact is being said and written, the crucial aspect of additional 25 per cent oil penalty continues to grip the nation’s attention.

After all, the additional 25 per cent tariff that Trump has imposed is by way of penalty on India for New Delhi’s purchase of Russian oil. Since the additional 25 per cent duty is over and above the 25 per cent reciprocal tariffs that Trump had earlier imposed, the question that arises is why the people of India should be made to pay the penalty when the advantage of the relative cheap oil imports went to a handful of private refineries, including Reliance Industries.

While there are seven Indian importers, Reliance Industries and Russia-backed Nayara Energy are two of the biggest, accounting for 60 per cent of total imports from Russia. Since the cheaper imports did not translate into any reduction in fuel prices for the consumers, therefore implying that the profits generated have largely gone to the refineries, why shouldn’t these companies be made to compensate for the shortfall in exports for those sectors whose entry into the US market is hit by the penalty imposed? According to a media report which quoted the US Treasury Secretary Scott Bessant, the transactions for Russian oil resulted in Indian businesses earning an estimated $16 billion (Rs1.40 lakh crore) in excess profits.

Interestingly, he further said that the module of buying cheaper Russian oil, and reselling it after processing, had begun only after the Russian Ukraine war began in 2022. Several EU countries benefitted to the tune of $21 billion from the Indian exports in the third year of imports.

It is said that India’s savings from the purchase of discounted Russian oil may have resulted in a saving of around $15 billion between Jan 2022 and June 2025. The other Indian companies, like Indian Oil, Bharat Petroleum, HMEL Bathinda, Hindustan Petroleum, and ONGC Mangalore imported only a fraction of the total Russian oil which was primarily used to indirectly subsidise the sale of petrol, diesel and LPG for the domestic market.

This brings me back to the question I asked. Why should Indian exports to the US be allowed to suffer as a result of the penalty being imposed? It’s none of the fault of exporters. Why can’t the Indian companies that saved big from cheaper Russian oil imports be asked to partly bear the penalty clause? After all, it is because of them that the country is being penalized. This question therefore becomes absolutely important given the growing demand from a section of the industry, that is calling for the government and the industry to share the tariffs, ensuring that each bear a burden of 15 per cent. This kind of tariff sharing will result in the effective target rate coming down to 20 per cent for the exporters.

I only hope that Reliance Industries too is made to take a share of the tariff burden. In addition, I would also like the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI), then two big industry representatives, to tell the nation how India Inc., which is slush with money, join the effort. The industry needs to stand up, rising to the occasion, and announce what share of the shock impact the exporters are likely to suffer will be borne by the industry. Remember, when in1995, the US had stopped food exports to the country, resulting in what is known as a country living in ‘ship-to-mouth’ existence, Lal Bahadur Shashtri had given a call for the nation to take a fast every week, on Monday, and the nation complied. His idea was to ensure that the people learn to ‘care and share’ during those difficult times.

I see no reason why the industry will not stand up if an appropriate call is given now. Asking the businesses to put up banners saying only ‘swadeshi’ stuff is sold here is in realty a half-hearted call. The definition of ‘swadeshi’ needs to clarified and strengthened if the real spirit behind ‘swadeshi’ and of course ‘swaraj’ as the Mahatma defined, has to be revived.

Moving on, I draw your attention to what I said on X micro-blogging site: ‘When farm exports go up, it is generally claimed that it is farmers who benefit. But when Trump’s 50% tariffs come into play, export bodies call for tax relief, stimulus packages to offset the losses. No one is talking of the losses farmers suffer and how to compensate them’. Does it mean that farm exports don’t benefit the farming community as we are being made to believe? If this is not true, I fail to understand why don’t exporters talk of the huge losses that farmers are expected to suffer?

Take for instance, the extension given to the removal of cottontariffs from the US. Earlier, the date the for the removal of 11 per cent cotton import tariffs from the US was in Sept; it has now been extended to December end. Already there are reports that the price of cotton has fallen by Rs 1,100 per cady just within two days of the zero tariff imports being announced. Reports also say that India, which has now become a net importer, will be importing an additional 40 lakh bales of cotton. This means the prices will fall further in the months to come, hitting millions of the cotton livelihoods. As to what it means, lets know that while the US has 8,000 cotton growers who get an annual subsidy exceeding $100,000; India has 98 lakh cotton growers, with landholdings as small as 1, 2 or three acres, and only a support of $27 per year. It is quite obvious that the dire need therefore is to protect the domestic cotton growers and not be swayed by industry pressure.

It is high time therefore for India to resist any further opening of India’s huge agricultural market to highly subsidised food imports from the US. Reiterating what I have said earlier: ‘Importing food is importing unemployment.’

(The author is a noted food policy analyst and an expert on issues related to the agriculture sector. He writes on food, agriculture and hunger)