Former Reserve Bank of India Governor Raghuram Rajan has criticised the ongoing US-India tariff discussions, describing them as “an exercise of power” rather than a genuine effort to strike a balanced trade agreement.
His remarks come days after US President Donald Trump announced an additional 25% tariff on Indian exports, bringing the total duty to 50% — one of the highest rates for any US trading partner.
The tariff hike follows Washington’s discontent over India’s continued imports of Russian oil.
In an interview with Valor International, Rajan acknowledged that “India should open its markets more” and could reconsider its oil purchases from Russia. However, he added, “It’s hard to negotiate with a gun to your head. And that’s basically what’s happening right now.”
The former RBI chief, now a finance professor at the University of Chicago, noted that the US is correct in pointing out India’s high tariffs in certain sectors.
But he also stressed that in areas like agriculture, Indian producers are smaller and poorer than their heavily subsidised US counterparts. Rapid liberalisation, he warned, could harm vulnerable farmers in a country without a robust social safety net.
“Both sides have a case. But the mistake was thinking this would be a patient negotiation toward a fair agreement, rather than one side saying: ‘Here’s what you’re going to give me,’” Rajan said.
He further argued that publicly linking the Russian oil issue to tariff threats had made it politically harder for India to comply. “An overt public decision to stop buying from Russia would be seen domestically as bowing to US pressure, which plays badly in any democracy,” he said. A quiet, phased request from Washington, he suggested, might have been more acceptable.
While Rajan believes India could weather a halt in Russian oil imports, he warned that the political fallout would be significant. On trade, he remains in favour of gradual tariff reductions, but cautioned against high-pressure tactics.
“I hope that tempers cool and talks resume, because a 50% tariff is unsustainable — not just for India, but also for the US, which risks alienating a country it hopes will be a strategic partner,” he said.