Former Reserve Bank of India (RBI) Governor Raghuram Rajan has urged New Delhi to rethink its heavy dependence on Russian oil supplies, warning that the country risks serious economic setbacks after Washington imposed unprecedented tariffs on Indian imports.
Speaking in an interview with India Today on Wednesday, Rajan described the latest measures as a “wake-up call” for policymakers. “These tariffs are deeply troubling. We must consider who truly benefits and who bears the cost. Refiners may gain from cheaper Russian crude, but exporters and manufacturers are now paying a steep price,” he remarked.
The 50% import duties, enforced by the Trump administration on August 27, are among the harshest levies the United States has ever applied against an Asian economy. Analysts caution that these penalties could hit thousands of small businesses and erode competitiveness in India’s export sector. Manufacturing hubs, already under pressure from rising costs, may also see widespread job losses.
What frustrates many in New Delhi is Washington’s contrasting stance toward Europe and China, both of which continue to purchase Russian energy without facing equivalent consequences. This disparity has fueled accusations of double standards.
Rajan argued that the episode highlights a growing trend where trade, finance, and investment are increasingly used as geopolitical tools. He called on India to expand its partnerships with Europe, Africa, and the Indo-Pacific to avoid being overly reliant on any single country. “Let us not put ourselves in a position where one external decision can jeopardize our growth path. India needs reforms that will sustain 8–8.5% growth and create jobs for our youth,” he stressed.
The former RBI chief’s remarks come as tensions rise between Washington and New Delhi. Just weeks earlier, former President Donald Trump posted on Truth Social: “I don’t care what India does with Russia. They can take their dead economies down together, for all I care.”
India’s External Affairs Minister S. Jaishankar fired back, branding the tariffs “unjustified and unreasonable,” while highlighting Western hypocrisy. “Europe buys, America buys… if you don’t like it, don’t buy it,” he declared.
Although India is unlikely to halt Russian imports entirely given its energy needs, market data shows purchases are already easing as Moscow’s discounts shrink. September imports are projected to dip compared with August, with refiners reluctant to buy at thinner margins.
Rajan, however, stressed the broader takeaway: “India cannot afford to ignore this signal. It is a warning to recalibrate our trade and energy strategy before tariffs undermine long-term growth.”
