Indian Oil Tariffs in Limbo; Brazil Provides $5.6 Bn Package to Exporters

Chennai: India’s oil tariffs hang on the outcome of the Trump-Putin meeting tomorrow on Ukraine as the US said it will increase or reduce them based on Putin’s decision on a ceasefire with Ukraine. Meanwhile, Brazil, with equally high tariffs as India, announced a $5.6 billion relief package for its exporters.

“It’s put up or shut up time… we put secondary tariffs on the Indians for buying Russian oil. And I could see if things don’t go well, then sanctions or secondary tariffs could go up,” Bloomberg quoted US Treasury Secretary Scott Bessent.

However, if the talks succeed, these measures against Russia “can be loosened”, Bessent said. He also asked the European bloc to join the US on these sanctions.

Industry in India finds linking trade with geo-political conditionalities unreasonable. “Linking tariff levels on Indian goods to the outcome of a third‑country summit is an unfortunate departure from predictable, rules‑based trade. Indian exporters are already facing a 50 per cent tariff shock; threatening further ‘secondary’ hikes only amplifies uncertainty in global supply chains,” said Ajay Sahai, director general, FIEO.

Trump has imposed an additional 25 per cent penalty for importing Russian oil, taking the total levies on goods to 50 per cent by August 27. Though Bessent also mentioned China, the US has not yet imposed oil tariffs on the country.

“The Trump administration sends mixed signals—talking of both raising and cutting tariffs on India on the same day. India should ignore the noise, stay calm, and focus on reviving domestic activity and exports,” said Ajay Srivastava, founder, GTRI.

Meanwhile, Brazil’s government on Wednesday rolled out a long-awaited relief package of $5.6 billion to support exporters hit by US tariffs of 50 per cent.

As per reports, the package offers aid for companies hurt by US tariffs by providing credit lines for exporters and government purchases of products that face greater hurdles in finding alternative markets. It will also provide affected businesses extra time to pay their taxes. Brazil also has made a comprehensive overhaul of the Export Guarantee Fund, designed to cover risks in export-related credit operations.

The waiver would have an export incentive program, and a transfer of money to guarantee funds to help exporters. However, it is not known whether these incentives are WTO-compliant.

The US government had levied 50 per cent tariffs on Brazilian goods for the criminal prosecution of former President Jair Bolsonaro.

“The details of Brazil's support are not known. The devil is in the details—pricing, eligibility, and conditionality which can only test its compatibility with the WTO. Our government is exploring the possibility of providing support through fiscal and non-fiscal measures,” said Sahai.

“India should urgently reinstate the Interest Equalisation Scheme with a Rs 15,000-crore annual budget and a five-year guarantee, slashing export financing costs for MSMEs in labour-intensive sectors. The earlier version, costing just Rs 2,500 crore, delivered a marked boost to competitiveness. Reviving it now would give millions of small exporters predictable, low-cost credit at a time when high interest rates are eroding their global edge,” added Srivastava.