As India and the European Union are set to sign a long-awaited Free Trade Agreement (FTA) on Tuesday, sharp remarks from US treasury secretary Scott Bessent have injected fresh tension into the global trade and energy debate, placing India at the centre of a widening geopolitical fault line between Washington and Brussels.
In an interview, Bessent accused European countries of indirectly “financing the war against themselves” by purchasing Russian oil products refined in India, even as they push ahead with a landmark trade pact with New Delhi.
He said Washington had made “bigger sacrifices” than Europe in efforts to curb Russia’s war against Ukraine, pointing to punitive tariffs imposed on India over its continued purchase of Russian crude.
“We put 25 percent tariffs on India for buying Russian oil. Guess what happened last week? The Europeans signed a trade deal with India. Russian oil first goes to India, India refines it, and Europe buys it. The Europeans are financing the war against themselves,” Bessent said.
His comments were aimed squarely at the European Union’s stance on India’s Russian oil imports and its simultaneous push to conclude the India-EU FTA, which is expected to be signed and formally unveiled tomorrow.
On Monday, Prime Minister Narendra Modi attended the Republic Day celebrations alongside European Council president António Costa and European Commission president Ursula von der Leyen, underlining the political significance of the agreement.
The remarks come at a time when India is also engaged in sensitive trade negotiations with the US, triggering renewed debate over tariffs, energy security and shifting trade alliances involving Washington, Brussels and New Delhi.
In 2025, the US imposed a 25 percent reciprocal tariff on select Indian exports, followed by an additional 25 percent penalty linked specifically to India’s purchase of Russian crude oil. This effectively pushed duties on some Indian goods to nearly 50 percent.
Washington has also tightened sanctions on Russia’s two largest oil producers, Rosneft and Lukoil, as part of efforts to choke Moscow’s war financing. While the tariff measures created hurdles for sectors such as textiles and hurt Indian MSMEs dependent on US exports, Bessent recently claimed that India’s Russian oil imports had “collapsed” following the move, hinting at a possible pathway for future tariff relief.
At the same time, he expressed frustration with Europe’s approach, saying US allies had refused to impose similar costs because they were keen to conclude a major trade deal with India.
The India-EU FTA is expected to cover goods, services, investment, digital trade, climate standards and regulatory cooperation, linking two economies that together account for nearly a quarter of global GDP and close to two billion consumers.
Negotiated initially in 2007 and revived in 2022, the agreement is set to mark India’s biggest trade opening to Europe yet. India is expected to slash tariffs on imported European cars to 40 percent from as high as 110 percent, with duties on a limited number of vehicles priced above 15,000 euros to be cut immediately and gradually reduced to 10 percent.
The deal is expected to significantly ease market access for European automakers such as Volkswagen, Mercedes-Benz and BMW, while reshaping trade, energy and investment ties between India and the EU at a time of heightened global economic and geopolitical realignment.
