美国、印度、俄罗斯：重蹈历史覆辙？

US-India-Russia: Repeating an historic blunder? Is India committing a blunder by siding with Russia? We believe changing geopoliticalalignments could have a significant impact on the India story. Below we discuss thehistorical context, current trade arrangement and repercussions. Venugopal Garre+65 6326 7643venugopal.garre@bernsteinsg.com What’s changed?The 50% (25%+25% penalty) US tariff imposed on India is in our viewthe least of the country’s worries, given how things change. What’s different, however, isthe sudden shift in tone and engagement we perceive. Having been seen as good for India-US relations until recently, Trump has now singled out India for Russian oil purchases. Indiahas, for the first time, responded firmly with its own statements, labeling US actions unjustand unreasonable while calling out its own trade with Russia. The trade discussions appearsuspended as per the latest developments, and India is unfazed. On top of that, news of PMModi’s visit to China for the first time since 2019 and Putin’s potential India visit are doingthe rounds. Nikhil Arela+91 226 842 1482nikhil.arela@bernsteinsg.com All is (not) wellNot long ago, when PM Modi visited Washington in Feb, talk of doublingtrade to $500bn and a deal by fall 2025 cheered us. Even on ‘Liberation Day’, India wasbetter off than most countries, and with the deal just around the corner, looked to breachthe 10% baseline tariffs. In July, claims of an impending announcement echoed every day,paving the way for 15% tariffs. But a deal never came; what came were 25% (then 50%)tariffs. Russian oil purchases have been in place since 2022, which also holds for China andTurkey, neither of which have been singled out yet. Turkey ‘enjoys’ 15% tariffs while China isseeing a temporary truce. America - the prosperity blueprint?Japan, South Korea, Singapore, and China till the2000s all gained immensely from being in the US camp, getting access to technologyas well as a large export market. But the likes of Cuba, North Korea and Vietnam werein the Soviet camp during the Cold War, and rank far lower in terms of prosperity. India,though non-aligned has long been perceived as close to Russia given defence ties partlybecause Pakistan was sided with US. In the past two decades, this historic misstep wasbeing rectified, as India grew closer to western blocs and formed some of its own (Quad).Investments were growing fast, but now all of that threatens reversal. Why US is indispensable: India’s merchandize exports to US are 18x that of Russia,while services present an even steeper case. Russian exports are fragmented - no singlecategory contributes $1 billion (top 10 account for 44%). This creates mammoth scale-upchallenges, as you find neither a huge market ready to absorb your products nor a productwith a reasonable footprint to upsell. In sharp contrast, imports comprise almost 90% ofenergy (top 10 make up 99%). Defence dependence has also come down, from nearly threefourths of all imports from the Soviets in the 1980s to a third today. Oil, historically sold byRussia at a $2-$3 per barrel discount, today extends to $5 as per reports. Given that it isUral grade oil which requires more refining, are these extra $2-3 really worth the diplomaticshift? Both oil and defence have alternatives, with US being one of them. We conclude aiming to leave you with this thought: Is it worth the risk to protect someindustries while closing doors for all others to sell? Or it makes more sense to open up to adeveloped country, where export opportunities will always trump the incoming imports? DETAILS INVESTMENT IMPLICATIONS We believe that a pivot away from US after years of strengthening relationship could prove a strategic error akin to what Indiamade close to 5 decades back. With US being India’s largest source of remittances and a major FDI source bringing in freshinvestments and JVs, the new partnerships (even if materialized) would simply neither be able to offer that part nor offer thescale of domestic consumption ready to take up Indian supplies. Border issues will always keep strategic alignment with Chinaout of question, a place where the current government relenting is neither possible nor plausible. The result? We believe markets haven’t yet accounted the extent of potential negatives and are still building for things to settle.The continued optimism has tempered the fall. The next few weeks should be crucial where we believe India will try to iron outissues, and might offer more concessions to the US. If talks fall through again and these tariffs sustain for over a month or so,shock will set in and markets will see a further fall, with textiles/manufacturing-linked stocks hit the hardest. Short term, this islikely the only impact, with GDP growth having a 20-30 bps of impact in the worse of cases. A significant macro impact will onlybe seen if the tariffs percolate to services, of which we haven’t seen any signs of, at least till now. The longer term