GTAP Resources: Resource Display
| GTAP Resource #7857 |
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"India’s Trade-Offs Between Accessing US Markets and Strategic Autonomy in Sourcing Oil " Authors: Chadha, Rajesh and Ganesh Sivamani Abstract The global trading order has been undergoing a structural transformation from a rules-based multilateral trade discipline to a fragmented landscape with asymmetric power plays in global trade networks. Since early 2025 the United States has been leveraging its market dominance to influence the foreign policy objectives, specifically coercing India to halt Russian oil imports. Consequently, India faces a geoeconomic trilemma: balancing domestic economic growth, safeguarding strategic autonomy in energy procurement, and preserving market access for its exports. This paper utilises the GTAP CGE model and version 12 database to quantify the macroeconomic impacts of US trade coercion. We consider baseline and distressed global oil markets to determine whether India’s optimal path is compliance, through terminating Russian oil imports, or defiance, by accepting a cumulative 35% tariff on exports to the US. The results show a divergence between impacts on GDP and national welfare. Under baseline conditions, India’s GDP contraction under defiance is less severe than under compliance, as refineries continue operating optimally. However, defiance leads to a larger reduction in national welfare than compliance, due to a more severe terms-of-trade deterioration in labour-intensive manufacturing. In a distressed global oil market following a Middle Eastern oil price shock, the rationale for compliance breaks down, making defiance a more strategic choice for macroeconomic stability. This paper also demonstrates that a coordinated multilateral retaliation with plurilateral liberalisation can neutralise the US’s optimal tariff theory of extracting welfare. To navigate this weaponised interdependence, the paper recommends a policy strategy for India: secure short-term oil sanctions waivers, provide fiscal support to labour-intensive, trade-exposed manufacturing sectors, and accelerate India's accession to multilateral trade agreements. |
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- Conventional energy - Supply chains - Asia (South-Central) - North America |
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Public Access  GTAP Resource 7857 (600.7 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 4/30/2026 12:56:16 PM
