India to contest Russia crude curbs, cite free pass for German firms

India plans to diplomatically raise the issue of the country being 'singled out' by the US and the UK and asked to stop buying crude oil from Rosneft while Germany has been given an exemption. Rosneft is a Russian firm that has been sanctioned by the US and the UK. The step is being taken to avoid the imposition of secondary sanctions.

Sources said, "The matter of India being singled out and asked to stop crude oil purchases from Russia will be raised at an appropriate diplomatic level with the UK and the US."

The move comes after Germany has been given a waiver by the UK by way of a 'special licence', allowing companies to work with two German subsidiaries of Rosneft.

The cases of Germany and India are near identical, said the sources. Rosneft owns a 49.13 per cent stake in its subsidiary Nayara Energy Ltd, a Gujarat-based refinery that was sanctioned by the European Union on July 18 and by the UK last week.

For Germany, a different yardstick was applied. After the round of fresh sanctions, Britain permitted its firms and banks to continue working with Rosneft Deutschland GmbH and RN Refining and Marketing GmbH, which are under German state control until March next year. Germany has also asked the US to ensure that three Russian-owned but German-run refineries — PCK Schwedt, MiRo and Bayernoil — were exempted from sanctions on Moscow’s oil industry.

German media outlets quoted Chancellor Friedrich Merz as saying that he was confident that Washington DC would grant an exemption to allow the refineries to keep trading — just like the UK did.

Over the past week, the US and the UK separately sanctioned Rosneft and Lukoil, both Russian oil companies, and asked customers to sever links with the two until November 21. The decision potentially hits New Delhi's crude oil purchase. India sources some 2 million barrels of crude oil from Russia. Since the sanctions were announced, crude prices have jumped almost $5 a barrel, meaning India would have to pay an additional $7-9 million a day just to secure 2 million barrels of crude.

Speaking at the Berlin Global Dialogue on Friday, Commerce and Industry Minister Piyush Goyal asked why India was singled out for new US sanctions on Rosneft and Lukoil, while Germany had been given exemption for Rosneft's subsidiaries.

Goyal posed the question to UK Trade Minister Chris Bryant, who had said, "The UK has sorted out its issues with Germany and the Americans will do something similar."

“Then why single out India?" Goyal retorted, calling out the inconsistency in global responses. He pointed out that while other countries benefited from exemptions and avoided extra US tariffs, India was facing an additional 25 per cent punitive tariff for its imports of Russian oil. India faces another 25 per cent as the reciprocal tariff, making it a total of 50 per cent levies on goods being exported from India to the US.

Germany had side-stepped sanctions as it used a method called 'trusteeship' in September 2022, shortly after the Russia-Ukraine conflict. The trusteeship allows the German government to manage Rosneft's stakes in key refineries.