- 7 weeks ago
India has rejected US President Donald Trump's claim that Prime Minister Narendra Modi had assured that New Delhi would stop buying Russian oil.
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00:00Okay, so let's raise the big questions. Has Donald Trump put India in a diplomatic spot once again with his remarks? Is there more than meets the eye to what Donald Trump is doing, his so-called theatrics? Should India publicly call out Donald Trump's falsehoods more strongly? Is India walking a dangerous diplomatic tightrope?
00:22And the key question, is the choice now between Russian oil and a US free trade or a trade agreement with the US, what is in India's national interest? Joining me now, Casey Singh, former Indian ambassador, Ashok Malik, partner at the Asia Group. Alexander Slater, MD Capstone, joined me from Washington. One of the world's leading economists, William Buter joins me, American-British economist, someone who's been chief economist with Citibank.
00:52Has worked with leading universities, joins me. Rahul Aluwalia, founder, director of Foundation for Economic Development. He's also with us. I appreciate all of you joining us. And I want to get each of you to respond to that. Let's first get in an Indian perspective. Rahul Aluwalia, your first reactions to what you've heard Donald Trump do. And I want to pose that question. Is it now Russian oil versus a US free trade agreement? What do you believe is in India's interest?
01:19Thanks, Rajdeep. This whole thing reminds me of this statement, you know, never argue with a fool. They drag you down to their level and beat you with experience. And I think in following Donald Trump, we have to be very careful in how we respond. We should not follow his lead in two things.
01:36The first is that we should not make public any agreements or disagreements. And for the first half of our handling of this affair, we were being very careful about this. We were doing strategic backroom deals instead of trying to drag this fight out into the public.
01:51And I think we should continue that strategy. It was a great strategy. The second thing is we should stop phrasing trade as a win-loss kind of affair. Trade is win-win. If we manage to get a trade deal with the USA, it is a win for the USA. It is a win for India.
02:10This is a mistake on Donald Trump's view that he thinks that trade is win-loss, right? He thinks that the US is losing when it is trading with other countries. This is simply not true. So we should not follow that.
02:23When it comes to the US versus Russia, my personal opinion is that the US matters a great deal more than Russia. Russia is a power of the past. The US is the largest economy in the world. It's one of the most technologically advanced countries in the world. It's a very complementary economy to ours. It is a fantastic trading partner. I don't think there is any doubt when it comes to choosing between the two.
02:47There are transactional minor wins on one side and huge strategic wins on the other. The choice is clear.
02:54Okay. Okay. That's an interesting argument to take forward, William Buter. Do you believe it's as stark as that, that India should be focusing more on managing its relationship with the US, hopefully working towards a trade agreement, rather than getting caught up in its oil transactions?
03:17With Russia. And therefore, the choice in that sense, may at some, is Donald Trump pushing India to make that choice? And is that a choice that should be made? Choosing the United States in a trade deal with the US over importing relatively cheap oil from the Russians?
03:34I think it is a very easy choice, actually. Yes. Russian oil is cheaper than alternative sources of oil that are available from the Middle East, especially. But there's no doubt that India could profitably refine and re-export oil that does not come from Russia.
04:02A second point, which I think people don't focus on much, is that Russia may not be able to reliably supply oil in the future if Ukraine gets the long-distance missiles, the Tomahawks, etc., that is asked for, and with which it could disrupt the ability of Russia to be an oil supplier.
04:27So these are two practical reasons. More generally, the US and, of course, the EU are much more important trading partners than Russia. Russia all provides its oil at a profitable margin, but not enough, I would think, to risk a non-agreement on trade with the US.
04:55Let me get in. Alexander Slater, MD Capstone from Washington, D.C. Your views, Alexander, is that a choice that Donald Trump is pushing India to make?
05:08And should India hold off in its national interest? According to you, at the moment, our figures show we import about 35% of our oil basket through Russia, but we are diversifying.
05:18Is it in India's interest, you believe, to diversify our oil basket?
05:22Thanks for inviting me to join the conversation. It's wonderful to be here with the distinguished panelists and to especially see my friend Ashok Malik. Good to see you, Ashok.
05:32Look, it's not for me to tell India what its interests are, but I do think that the facts speak for themselves, and I think some of the panelists who have preceded me have eloquently stated that.
05:43Some other facts that are of interest are that, you know, since the tariffs were imposed, the price of oil has gone down 10%, and the discount that India was paying on Russian crude was about 5%.
05:57And so whatever cost India may have had to foot in terms of diversifying away from Russian crude has basically evaporated if you were comparing the situations today to August.
06:09So that's sort of the first thing. I think these questions about the reliability of Russian sources is a very good one.
06:15You've seen that Ukraine, even without the Tomahawk missiles, has stepped up its attacks on Russian energy infrastructure to great effect in Russia, where energy prices have gone up significantly, and they're on the verge of energy rationing for Russians.
06:31And so these are things that I think are in India's interest to consider when they think about that side of the ledger.
06:38On the other side of the ledger, I think it's actually quite clear that the impact of the tariffs has been very negative for the Indian economy.
06:45Goods exports to the United States are down 50%, I think, over the last four months, with the new data in from September.
06:53And that's why the rupee has depreciated 5% against the dollar over that same period.
06:58You would not expect anything like that to happen when, effectively, Indian goods in the United States are becoming cheaper.
07:05You would expect Americans to buy more of them, not less.
07:08But you see the impact of the tariffs, and you see the tariffs having a major impact, especially since the 50% came into effect in August.
07:15Where the goods purchases from India by Americans have gone down 12% in that period.
07:22And you see having a very big impact on areas of the Indian economy, like textiles, jewelry, and even some electronics, steel, and chemicals.
07:32And so all of these calculations have to be balanced against one another.
07:36And it seems, based on, I think, some of the things the prior panelists have said, and the economic data, that this is trading in a negative direction.
07:44Just let me put that, before I come to you, Ashok, in some stark terms for our viewers.
07:55Cheap oil from Russia or trade deals with America is a dilemma of sorts.
08:00The United States remains India's top trading partner.
08:03Total bilateral trade touched nearly $132 billion in FY24-25.
08:09India, importantly, enjoys a surplus here.
08:12Of course, tariffs have, in a way, weakened some of the key sectors like textiles, gems, and jewelry.
08:18We export more, over $86 billion worth of goods than we import.
08:22This is prior to the tariffs coming in.
08:24With Russia, it's the opposite story.
08:26Despite being only our fourth or fifth largest partner, India now imports over $63 billion worth of Russian goods, mainly discounted oil, exporting less than $5 billion.
08:38That's a trade deficit of nearly $59 billion.
08:41Just putting that in some kind of context.
08:44Therefore, Ashok Malik, do you believe Donald Trump is willy-nilly pushing India to make certain choices?
08:49What might have been seen in India's interests a few months ago,
08:52there are those who claim it was in the interests of big business, who are doing the oil deals, not necessarily the consumers.
08:58That is a separate dispute.
09:00But do you believe that the time has come for India to re-look at the way they've benefited from Russian oil,
09:07but now need to benefit for the trade deal with the U.S.?
09:11One, India needs the trade deal with the U.S.
09:25India also needs reasonably priced energy.
09:28There is no binary choice here.
09:30India needs both.
09:31It's the responsibility of effective diplomacy and imaginative statecraft to make sure both happen.
09:37In 2022, when the Ukraine war began, reasonably priced energy entailed an enormous amount of imports from Russia
09:45because other sources were not available.
09:48For example, Saudi Arabia stopped producing excess oil.
09:53For its own reasons, whatever reasons, it stopped producing oil.
09:56Today, Saudi Arabia is pumping out oil.
09:59Other sources have become available.
10:01The discount at which Russian oil is available has declined.
10:05And organically, Indian buyers, public sector buyers, private sector buyers, will make market-driven choices,
10:15some of which might see some diversification from Russia.
10:18The second point, please look at Trump's statement today in response to an answer to a question.
10:24In response to a question.
10:26His tone was collaborative.
10:28It was even dignified.
10:29He spoke about a gradual decline, not tomorrow morning, but a gradual decline.
10:35He even said, once the war is over, we're doing this to put pressure on Russia.
10:39Once the war is over, India can go back to buying Russian oil.
10:42This is all very different from the rhetoric coming out of the Trump administration a few weeks ago,
10:47which leads me to believe that some background diplomacy is working.
10:52And the third point I'd like to raise,
10:53Is Mr. Trump giving himself wiggle room and the political pathway to diluting or removing the 25% sanctioned tariffs which he imposed on India?
11:06Which is the key question.
11:07And the proof of the pudding lies there.
11:08Interesting that you believe, therefore, you're seeing even in the seeming bombast of Donald Trump,
11:20as some have seen in the past, now a toning down of rhetoric.
11:23Is that how you see it, Casey Singh?
11:24That India needs to, in a way, provide perhaps Donald Trump some room to wriggle out of the tariff issue so that a trade deal is cemented next month.
11:36Diplomatically, India has been very careful not to challenge Donald Trump beyond the point.
11:41The MEA claimed there was no conversation between Prime Minister Modi and President Trump.
11:45But beyond that, they haven't really taken on Donald Trump at any time.
11:50Even when his advisor spoke of India being a dead economy, we were very quiet.
11:54Is that strategy, in your view, working slowly but surely?
11:58Even today, when he speaks about Russian oil, is there a toning down, as Ashok Malik seems to suggest?
12:05No, Krasdi, I don't think you can deal with issues, oil, etc., in separation.
12:11Because you're dealing with Trump as a whole entity.
12:13And for him, the whole Russian oil issue is linked to Ukraine.
12:19And he feels that the Ukraine, and he has said it, India is keeping the Ukraine war going.
12:24Now, the problem is that there are two ways to deal with Trump.
12:27One is the way the Europeans have done it, the way most of the world is doing it.
12:32Just stand there, be embarrassed by Trump, but largely don't take him on.
12:35You can privately do what you want, and publicly you can adopt whatever policy, but don't confront him.
12:41The other one is the Chinese matter.
12:43The Chinese had cut a deal with them, and now they've gone back on that deal.
12:47And they're back again to rare earths, and Americans are facing a problem there.
12:52Probably that's one of the elements that might help India.
12:55Now, the problem in dealing with Trump is that he publicly embarrasses you.
12:59But then we also make mistakes.
13:02When ambassador-designate Gore was here, never diplomatically, never ever, an ambassador-designate is received by a head of government.
13:12Now, Prime Minister met him, took a painting from him, signed by Trump.
13:16Whatever he discussed with him, Gore would have gone and told Trump.
13:21Now, when Trump says, I've been told, it doesn't mean he's been told directly by Prime Minister.
13:25Maybe that's what Gore went and told him.
13:28So, when you start breaking conventions, you think you can please Trump and get across to him, then you'll always have a mix-up.
13:34I think with Trump, you have to have a very straightforward way of dealing with him.
13:38Russia is a relationship with Russia is more than just oil.
13:42You know, we have a defense relationship.
13:44Tomorrow, you can have instability in the Gulf, and the oil supplies can seize.
13:48Iran is not part of the Sharm al-Sheikh meeting.
13:52So, the Israelis are not about to stop.
13:54They're still going after Iran.
13:56So, it's a region from which we are getting oil, which is very unstable, and it can get destabilized very rapidly.
14:03Therefore, you need a diversity of relationships, which are necessary for defense equipment, which are necessary for oil, energy, gas, and so on and so forth.
14:12So, and also, it is necessary for your international image, because the whole world is watching.
14:18The smaller countries, global south, they're watching who is able to stand up to Trump.
14:24Now, it doesn't mean you fight with him, but the Chinese are getting that leadership.
14:27The Chinese are the ones who will be seen as the other power which can stand up to the Americans.
14:32Now, if we go on getting embarrassed, and then we have to publicly have the spokesman of the MEA sort of wriggle out of it, then this will continue.
14:42This will not stop.
14:43Look at the importance.
14:44Prime Minister didn't go to Sharm al-Sheikh.
14:46Why?
14:47Because look at the importance given to the Pakistani Prime Minister.
14:50And there was a danger that Trump may just call Prime Minister Modi and say, come on, shake hands with Prime Minister Sharif.
14:57You're dealing with...
14:58You can keep saying in public...
14:59No, so he did the right thing.
15:00No, no, let's be clear, Casey Singh, the Prime Minister...
15:03No, no, let me intervene then.
15:05The Prime Minister did not go to Sharm al-Sheikh.
15:07On hindsight, it was probably the right thing to do.
15:10Absolutely.
15:10I mean, you don't want to be part of some Trump love fest, surely.
15:14Absolutely.
15:15But then keep that message consistent.
15:18You don't receive an ambassador-designate and take a painting from him.
15:21God knows what he goes and tells Trump.
15:23And then Trump will...
15:24Okay.
15:24Trump will just...
15:26Here's a stream of consciousness.
15:27You give him a mic, he'll say whatever occurs to him.
15:30Whether it embarrasses you or it doesn't embarrass you, it's happened time and again.
15:34And I think you have to choose how to deal with Trump.
15:37And if you think that you can appease him, it's not going to work.
15:42Because that is not the way the Chinese are dealing with him.
15:45Okay.
15:47Okay.
15:48I've got your point.
15:50You've made that China point.
15:51I want to take that to you, Rahul Aluwalia.
15:53The Chinese are using, for example...
15:56You know, they're using...
15:57Yes, William, you...
16:00Let me get an intervention.
16:01William Buter, you wanted to intervene.
16:03I heard you.
16:03Go ahead.
16:04No, it's just important to recognize that these negotiations are not just about the Russian 25%.
16:12They're about the whole 50%.
16:14And meaningful trade negotiations will have to continue even after India, if they were to do so, discontinuous oil imports from Russia.
16:25There would have to be concessions on tariff barriers and on non-tariff barriers.
16:32So, this is not just Russia we're talking about.
16:40So, why is Trump again raising Russia again and again is the question.
16:47Is he using Russia as a bargaining chip to push India to the wall?
16:52And should India stand up, Rahul, as is being suggested by Casey saying, we shouldn't be seen to be bullied by Trump.
16:57Instead, rather than go overboard in any way, we've got to stand up.
17:02The Chinese have done so and have done reasonably successful.
17:05But the Chinese have rare earths.
17:07They have weapons available.
17:09They are a much larger economy.
17:10So, they can stand up to Donald Trump.
17:12Can India do so really?
17:14Can we really stand up to Trump?
17:16Or do we need to really work carefully to negotiate a win-win trade deal?
17:21I mean, first of all, China's success is very qualified.
17:25They've just had 100% tariffs announced against them.
17:28And by and large, this whole thing was set off by China.
17:31So, I would not qualify China's strategy as a success by...
17:36But they're not concerned about it.
17:37The Chinese don't seem, as of now, Rahul, just to intervene, the Chinese don't seem as concerned about it.
17:43They seem to be willing to look at Donald Trump in the eye.
17:46If they're not, that's a mistake.
17:47The Chinese economy is extremely fragile.
17:50They've been in situations of overproduction for almost five or six years now.
17:55Their real estate sector is in massive crisis.
17:59If I were the Chinese, I would be very worried no matter what brave front I'm trying to put up to the rest of the world.
18:04So, I mean, I would not at all say that we should copy China in any way, shape or form at all.
18:12But that doesn't mean that we give up self-respect or anything of the sort.
18:16We should just not view it in those terms.
18:19We should view it, we should not take Trump on his terms.
18:23Why are we trying to meet Trump on his terms?
18:25Our strategic interest should be of primal importance to us, right?
18:32And our strategic interests lie in securing a large market with the USA.
18:38Our strategic interests lie in lowering our own trade barriers so that our economy becomes more competitive,
18:44so that our economy becomes more efficient and grows.
18:47Because it is in our interest to lower trade barriers.
18:51We should always remember that.
18:52We should reform our economy in such a way that we don't need trade barriers to hide behind.
18:58Our agriculture sector has been crying out for reform for decades.
19:03We could use this as a reason to reform our agricultural subsidies.
19:08It doesn't mean we stop agricultural subsidies.
19:11We should protect our farmers.
19:13We should protect the people who need protection.
19:16We should not protect particular types of crops.
19:19We should not protect particular types of fertilizers.
19:23We should not protect particular types of water withdrawal methods.
19:27This is just inefficient.
19:29It hurts us.
19:30It hurts our environment.
19:32It hurts our farmers.
19:33It hurts our long-term strategic interest.
19:35This is an opportunity to do something about it.
19:38And we should look at it in those terms, not in the terms of are we winning or losing against Trump.
19:42That's a mistake.
19:43Alexander Stater, is there a realization, though, where you are in Washington, that Donald Trump is leading the world into a very dangerous path with sort of ultra-nationalism at one end,
20:01upending the multilateral trade order that existed, or a global trade order, with his unconventional use of tariffs as a weapon.
20:12Is there finally a recognition that eventually America will pay a price at some stage for what Donald Trump is doing?
20:20Is there finally that recognition coming in almost six months after he first sort of used in April tariffs as a weapon?
20:29It's a difficult question to answer because, you know, the U.S. economy itself is in a strange state.
20:37Earlier in the year, it looked like it wasn't growing at all.
20:39And then the second quarter growth was actually quite impressive.
20:43Parts of the U.S. economy are growing extremely well.
20:46Many people point to the AI boom as the main driver of growth in the United States.
20:52And there's evidence to suggest that that is exactly what's happening.
20:56Other parts of the U.S. economy appear to be weaker.
20:58China's retaliation against the United States in this current trade spat involves not buying any sorbines from the United States.
21:06And so there's discussions here about a $10 billion bailout for U.S. sorbine farmers.
21:11So parts of the U.S. economy are being hurt by these extended trade discussions.
21:15But other parts of the U.S. economy feel very good about it.
21:18I think certain domestic interests like steel producers, lumber producers, aluminum producers, think that the tariffs that President Trump has imposed are wonderful.
21:31Because effectively, it allows them to charge higher prices for their goods.
21:37So it's actually a pretty complex question to answer at this point in time.
21:42I do think personally, ultimately, the long-term interest of the United States involves a more open economy and good relationships with its allies around the world, including India.
21:53And I'm hopeful that we'll come to a resolution on that soon.
21:56So let me come, Ashok, Malik, to where, in a way, circle back to that key issue.
22:06Should India now stand up in some way to Donald Trump every time he makes these comments that seemingly embarrass India, give the opposition another talking point?
22:17Or should the focus be on quiet backroom negotiations, we've got the Commerce Ministry team, even now in Washington, as we speak, and get the trade deal done?
22:28Whatever else happens with the Russian oil deal, separate that from the trade deal.
22:34To be honest, India has managed this with some dignity and with some effective diplomacy, because it's Trump's rhetoric that has changed.
22:44Trump is still saying, don't buy Russian oil. I agree. But his language today was collaborative, was, you know, conciliatory.
22:52It's said that you can do it gradually in the next few, I presume, weeks. You can go back to Russia after the war is over.
22:59He didn't call India a dead economy. He wasn't abusive.
23:02Some weeks ago, he and his team had been, frankly, abusive and got people very riled up in India, and justifiably so.
23:09Today, he was more collaborative. So obviously, some diplomacy has happened in the background, for which India needs to get credit as well.
23:18And quite honestly, I have to disagree with Mr. Casey's thing. He's an old friend and he's a diplomat.
23:24I think it required the government in India to engage an ambassador-designator. These are extraordinary circumstances.
23:33Yes, it was a violation of diplomatic conventions to engage Gore, but diplomatic conventions exist to facilitate national interest.
23:42National interest doesn't exist to facilitate diplomatic conventions. And it wasn't a national interest to engage Gore.
23:48That's it. Okay. A final word then, Casey Singh, do you go along with Ashok Malik, that we are seeing, despite what Trump said today about Russian oil,
24:00we are seeing a softening of America's stand, and that's good news.
24:04And that perhaps our national interest requires us to, at times, break with diplomatic conventions.
24:10Well, then what was the need for the spokesman of the ministry to contradict it?
24:16If you think that things are changing and Trump is only sending positive signals, what was the need to say there was no discussion between the prime minister and the president?
24:27We are the ones who reacted to that.
24:27No, because it is embarrassing. Because it is embarrassing. It is embarrassing for a government that claims to have an independent foreign policy to be told by the U.S. president
24:35that we've got an assurance from the Indian prime minister, we will not buy Russian oil.
24:40I'm answering Mr. Malik's thing that if we are seeing such positive reaction out of U.S., then what will the need to do it?
24:49We are doing it because Trump is unpredictable. Because you don't know what happens tomorrow.
24:54You don't know what will be the final outcome.
24:57You see, there are two parts to the trade deal. One is the Russian part, the 25%.
25:01And then there is the other 25%. The latest Economist magazine has done an article which says actually most of the tariffs that he has imposed,
25:10in reality, if you take the exceptions that he has made, it's working out to much less than 20-25% for each country, even for Canada or for Mexico.
25:19So it's a very confusing and very confused state of affairs. And in that, to get a trade deal, you know, one of the gentlemen in your panel was saying that we can reform agriculture in India.
25:33You saw the farmer's agitation. It's not an easy thing to just reform agriculture in India. How do you do it?
25:40The bulk of the people in India are dependent on agriculture. How do you overnight reform it?
25:44It's just not possible to do it. You see the kind of agitation which took place over the farm laws.
25:52So it's a very complex thing. I think the government realizes that you cannot allow, expose our agriculture and dairy sector.
26:00Sorry, one last thing. Dairy sector is not just reform. We are concerned about genetically modified crops coming in.
26:08We are concerned about dairy items coming in where the cows are being fed non-vegetarian food.
26:15Now, how will BJP, you know, accept that? When you're going around, people are getting lynched for supposed selling beef.
26:26Casey, I want to stop you there.
26:28India, they'll have to be home.
26:29We can go back to the nitty-gritty of the trade deal on another day.
26:33Today, the focus has been more on the choice that was made.
26:40Yes, William, you want to make a final point?
26:43The final point is India really has to reform its agricultural sector.
26:47It is far too large for the growth trajectory that India is capable of.
26:54It has to shift labor and other resources out of agriculture into manufacturing and services, especially high-tech services.
27:03This is a chance to do so.
27:06Don't protect your farmers through tariffs if lower tariffs endanger their livelihoods, temporarily subsidize their incomes.
27:18India has to move into the second quarter of the 21st century.
27:28The agricultural sector should not be an obstacle to trade deals with the U.S.
27:33Okay, we will leave it there.
27:39I think we've heard various viewpoints.
27:41Clearly, Donald Trump, as I said, keeps upending traditional ways of doing diplomacy,
27:47traditional ways of operating in this multipolar world.
27:52But I appreciate my guests joining us and giving us from the United States and here in India varied viewpoints.
27:59Thank you all very much.
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