Former RBI Governor Raghuram Rajan has triggered a political storm by claiming that the United States’ 50 per cent tariff on Indian exports was not primarily about India buying discounted Russian oil but because New Delhi refused to publicly credit Donald Trump for brokering the May 2025 India-Pakistan ceasefire after Operation Sindoor.
Speaking at the University of Zurich on December 4, Rajan said the real trigger was “personalities—especially a personality in the White House.” He pointed out that Pakistan quickly endorsed Trump’s claim of having single-handedly stopped the conflict and even nominated him for the 2026 Nobel Peace Prize, earning itself a lighter 19 per cent tariff, while India insisted the ceasefire was reached through direct military-to-military talks and received the full 50 per cent penalty.
“Russian oil wasn’t the issue,” Rajan stressed, citing Trump’s recent waiver of sanctions on Hungary for similar oil purchases as evidence that the White House applies rules selectively. He suggested the tariff disparity stemmed from India’s refusal to “play along” with Trump’s version of events surrounding the May 10 ceasefire that ended the brief but intense border conflict sparked by the Pahalgam terror attack.
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The former central banker’s remarks, captured in a widely circulated video, have drawn sharp criticism across Indian social media. Many users accused Rajan of undermining national interest and implying India should have indulged Trump’s narrative for economic gain. “India paid a higher tariff because it refused to bow,” wrote one prominent commentator, while another called Pakistan’s approach “boot-licking diplomacy that paid immediate dividends.”
Defenders of the government’s stance argue that acknowledging fictitious U.S. mediation would have weakened India’s position on terrorism and sovereignty, especially after Operation Sindoor targeted terror launchpads deep inside Pakistan-occupied Kashmir. They maintain that paying a short-term economic price for long-term strategic credibility was the correct decision.
As the controversy rages, Rajan’s comments have reignited debate over how India should navigate Trump’s transactional foreign policy, with upcoming trade talks now under even greater scrutiny. With bilateral trade worth over $190 billion at stake and fresh U.S. threats looming on agriculture and pharmaceuticals, New Delhi faces the delicate task of protecting economic interests without compromising its diplomatic red lines.
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