India’s shift from Russian crude may be offset by lower US tariffs: Nomura

Core Viewpoint - India's transition away from discounted Russian crude oil is expected to be compensated by potential reductions in US tariffs, which may facilitate a trade deal with the US [1][2]. Group 1: Tariff and Trade Implications - A reduction in tariff rates below the ASEAN average of 19%-20% would enhance India's competitiveness in labor-intensive exports [2]. - The 25% punitive tariff on Russian oil purchases is anticipated to be lifted after November, while the reciprocal 25% tariff will remain until the end of the fiscal year in March [2]. Group 2: Oil Import Dynamics - India has imported approximately 1.8 million barrels per day from Russia this year, representing 36% of its total oil imports [6]. - Major Indian refiners are expected to reduce Russian oil imports to nearly zero following US sanctions on Rosneft and Lukoil [4]. Group 3: Economic Impact - The direct economic impact of switching from Russian oil is estimated to be around 0.04% of GDP, with a more significant indirect impact expected from rising global oil prices [4]. - A 10% increase in crude oil costs could raise inflation by about 30 basis points and reduce growth by approximately 15 basis points, assuming full pass-through to domestic prices [8].