India-US Trade Deal To Boost Exports, Moody’s Warns Of Inflation Risk If India Cuts Russian Oil Imports

New Delhi: The proposed trade deal between India and the US has created a positive buzz in markets and policy circles. According to Moody’s, lower US tariffs will benefit India’s gems, jewellery, textile, and labour-intensive sectors, making the deal credit positive. It will enhance India's exports and improve access to the US market, opening up new opportunities in technology, manufacturing, and defense.

Risks of Reducing Russian Oil Imports

Moody’s has issued a caution that if India significantly or suddenly cuts its oil imports from Russia, the move could tighten global oil supply. This would lead to higher crude prices, affecting not only India but also other oil-importing countries.

Higher oil prices mean more than just expensive petrol – it impacts transport, logistics, manufacturing, and the cost of daily essentials, ultimately pushing inflation up.

Global Economic Impact

As a major oil consumer, India’s shift away from Russia will not remain a domestic matter. It could disrupt global energy supply chains, intensify competition for oil among importers, and raise inflation globally, which could slow down economic growth.

Why Russian Oil Matters for India?

Russian oil has been a crucial support for India due to its low cost and easy logistics. If India is forced to buy from more expensive sources, the burden on the economy will increase significantly.

Moody’s Suggests Gradual Shift

Moody’s recommends that India should diversify its energy supply gradually, rather than abruptly exiting Russian oil. Energy security and stable supply are key to India’s economic development, and any transition should be strategic and balanced.