India is caught in the crosscurrents of global trade tensions, Urjit Patel, former RBI Governor and India's newly appointed Executive Director at the International Monetary Fund (IMF), has said.
Patel warned that punitive US tariffs are battering Indian exporters, while discounted Russian crude is offering crucial relief to the country’s external accounts.
In an interview with the Indian Express, Patel also spoke about the opportunity facing India, arguing that 87% of global trade is carried outside the United States.
‘55 per cent of exports facing punitive tariffs’
Patel noted that Indian exports to the United States have been hit hard. “About 55 per cent of our exports to the US at the moment are facing punitive tariffs, and these are the sectors where the pain needs to be mitigated,” he said.
According to him, while the US accounts for 13 per cent of world trade, “87 per cent of global trade is carrying on as before, so there is scope for trade deepening.”
Further, he said that the government appears active in addressing the challenge, adding that there was wider damage being caused that needed immediate intervention.
“A very significant cost around the tariffs overall – whether in the form of secondary sanctions or retaliatory tariffs – is that investment uncertainty has become very high,” he said. “It’s not only that the tariffs are high, but the scope for abrupt changes in these tariffs is also there, as we have noticed over the last six months.”
‘Positive benefit to balance of payments is huge’
Patel also pushed back against comparisons between India’s savings on Russian oil imports and potential export losses in the US. “I haven’t seen any credible calculations on the so-called analysis… The positive benefit to our balance of payments on account of this is huge,” he told The Indian Express.
He stressed that without access to discounted Russian oil, India’s external position would be far more vulnerable. “If we were to go into the open market, oil price increases would impact our balance of payments quite significantly… It’s not a question of a one-time couple of billions here and there. It is substantially more,” Patel said.
India, the world’s third-largest oil importer, has continued to legally buy Russian crude since the imposition of the G7’s price cap in 2022.
“There are still a number of countries that purchase Russian energy. Whether you are purchasing oil or LNG doesn’t matter – it’s still hydrocarbons coming from a large exporter of these products,” he added.
Sanctions and global instability
Patel criticised multilateral institutions for failing to account for the destabilising effects of sanctions.
“What is disappointing here is that multilateral institutions have not been fully cognisant and transparent that sanctions, secondary sanctions, counter-sanctions, counter-measures, are a substantial source of economic instability,” Patel said.
“They not only affect the countries directly, but the spillovers are immense – and this has been the case for a while.”
“It’s not just a question of geopolitics. It’s a fundamental source of economic uncertainty and instability for the global economy,” Patel observed.
Patel warned that punitive US tariffs are battering Indian exporters, while discounted Russian crude is offering crucial relief to the country’s external accounts.
In an interview with the Indian Express, Patel also spoke about the opportunity facing India, arguing that 87% of global trade is carried outside the United States.
‘55 per cent of exports facing punitive tariffs’
Patel noted that Indian exports to the United States have been hit hard. “About 55 per cent of our exports to the US at the moment are facing punitive tariffs, and these are the sectors where the pain needs to be mitigated,” he said.
According to him, while the US accounts for 13 per cent of world trade, “87 per cent of global trade is carrying on as before, so there is scope for trade deepening.”
Further, he said that the government appears active in addressing the challenge, adding that there was wider damage being caused that needed immediate intervention.
“A very significant cost around the tariffs overall – whether in the form of secondary sanctions or retaliatory tariffs – is that investment uncertainty has become very high,” he said. “It’s not only that the tariffs are high, but the scope for abrupt changes in these tariffs is also there, as we have noticed over the last six months.”
‘Positive benefit to balance of payments is huge’
Patel also pushed back against comparisons between India’s savings on Russian oil imports and potential export losses in the US. “I haven’t seen any credible calculations on the so-called analysis… The positive benefit to our balance of payments on account of this is huge,” he told The Indian Express.
He stressed that without access to discounted Russian oil, India’s external position would be far more vulnerable. “If we were to go into the open market, oil price increases would impact our balance of payments quite significantly… It’s not a question of a one-time couple of billions here and there. It is substantially more,” Patel said.
India, the world’s third-largest oil importer, has continued to legally buy Russian crude since the imposition of the G7’s price cap in 2022.
“There are still a number of countries that purchase Russian energy. Whether you are purchasing oil or LNG doesn’t matter – it’s still hydrocarbons coming from a large exporter of these products,” he added.
Sanctions and global instability
Patel criticised multilateral institutions for failing to account for the destabilising effects of sanctions.
“What is disappointing here is that multilateral institutions have not been fully cognisant and transparent that sanctions, secondary sanctions, counter-sanctions, counter-measures, are a substantial source of economic instability,” Patel said.
“They not only affect the countries directly, but the spillovers are immense – and this has been the case for a while.”
“It’s not just a question of geopolitics. It’s a fundamental source of economic uncertainty and instability for the global economy,” Patel observed.
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