India-US energy deals: Will Modi flex his political muscle?

Richa Mishra New Delhi | Updated on February 23, 2020 Published on February 24, 2020

A file photo   -  REUTERS

Being re-elected with a huge majority gives PM the power to negotiate better

As the countdown begins for the much-talked about visit of the US President Donald Trump to India, what everyone is watching out for is whether Prime Minister Narendra Modi will bargain from a position of strength when he sits down to talk business with the American President.

Energy, particularly oil and gas, is one area where the US needs India as much as India needs the US. The only difference being India as a buyer and the US as the seller.

Today, India depends heavily on imports to meet its crude oil and gas requirements. According to latest data available, the US is among the top five suppliers to India, and is aiming to further strengthen its position. India, on the other hand, is looking for a seller which can give it assured supplies at a competitive price.

‘American bullying’

Vandana Hari, founder and CEO of Vanda Insights, said, “The US has basically come to dictate India’s choices, directly and indirectly, on where it buys its crude from, over the past couple of years.”

The sanctions against Venezuela and Iran, and now a potential threat to Russian crude supply, have one by one closed or threatened to close doors, just when Indian imports are growing and the rising instability in West Asia has amplified the need to diversify the sources, she said.

“Continuing to replace more Middle Eastern, Venezuelan and Russian import barrels with US crude is surely not the answer,” she added. Is it time for New Delhi to push back at American bullying? “I would say most certainly yes!” she said.

In fact, being re-elected with such a majority gives Modi the power to negotiate better, feel industry watchers.

Ferrying fuel from the US is not cheap and will add to India’s import bill as the sale and purchase is dollar-denominated.

Topics on the agenda

Trump and Modi are expected to discuss issues related to Indo-US strategic partnership in the areas of defence, security, counter-terrorism. Also, trade, energy and people-to-people exchanges will be discussed at their bilateral delegation-level talks in New Delhi on February 25.

The US President and his wife Melania Trump will spend less than 36 hours in India.

He will be accompanied by a high-level delegation. While a trade deal will not be signed by the two countries, there could be progress on a number of defence deals.

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Published on February 24, 2020
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