India reportedly saved lakhs of crores of rupees by importing huge volumes of discounted Russian crude after war broke out in Ukraine, but the 50% punitive tariffs imposed by the US that took effect on August 27 morning are expected to erode those gains.
Analysts estimate that India has saved at least $17 billion since early 2022 through higher imports of Russian oil. However, according to the New Delhi-based Global Trade Research Initiative (GTRI), Trump’s decision to levy additional tariffs on Indian exports could cut shipments by more than 40 percent — equivalent to nearly $37 billion — in the current fiscal year.
The fallout from the tariffs is likely to be long-lasting and could prove politically damaging for Prime Minister Narendra Modi, with thousands of jobs at risk in labour-intensive sectors such as textiles, gems and jewellery.
India’s response in the coming weeks could reshape its long-standing partnership with Russia while forcing a recalibration of its increasingly complex ties with the US.
Happymon Jacob, founder of the Council for Strategic and Defence Research in Delhi, said India continued to depend on Russia for defence supplies, discounted crude when available, continental geopolitical support, and backing on sensitive political matters. He argued that these dependencies made Russia an invaluable partner. At the same time, he stressed that despite difficulties in relations with Washington under Trump, the US remained India’s most important strategic partner, and that New Delhi did not yet have the luxury of choosing one over the other.
Government officials indicated that New Delhi wanted to repair ties with Washington and was willing to expand purchases of US energy, though it remained reluctant to end Russian imports altogether. Foreign Secretariat officials confirmed on Tuesday that talks were ongoing, with Indian and US representatives holding virtual discussions covering trade, energy security including nuclear cooperation, and critical minerals exploration.
Russian crude now makes up nearly 40 percent of India’s oil purchases, compared with almost nothing before the Ukraine war. Analysts cautioned that an immediate halt would not only amount to capitulation under pressure but would also be economically unfeasible. Indian refiners, led by Reliance Industries—operating the world’s largest refining complex in Gujarat—are among the biggest buyers.
Global crude prices could more than triple to around $200 a barrel if India, the world’s third-largest oil importer, stops buying from Russia. India would also lose the up to 7 percent discount Russian oil currently offers.
In a rare rebuke earlier this month, New Delhi accused Washington of double standards for singling out India over Russian oil imports while continuing to purchase Russian uranium hexafluoride, palladium and fertiliser. Officials also argued that other large importers such as China had not faced penalties.
US Treasury Secretary Scott Bessent accused India of profiteering from its sharply increased Russian oil purchases and described the practice as unacceptable. He claimed that China’s imports had risen only slightly, from 13 percent to 16 percent, compared with India’s surge since the conflict began.
India’s foreign ministry explained that crude imports from Russia were intended to ensure predictable and affordable energy for domestic consumers, describing the purchases as a necessity driven by global market conditions. It warned that halting imports, currently at around 2 million barrels per day, would disrupt supply chains and send domestic fuel prices higher. Officials also recalled that the previous US administration under Joe Biden had supported India’s continued purchases of Russian oil to keep global prices stable. Russia indicated it expected India to maintain its buying programme.
In parallel, India has stepped up diplomatic engagement aimed at bolstering multi-polarity. Senior officials have travelled to Moscow in recent days, while Modi is due to visit Beijing this month for the first time in over seven years. India–China relations have been improving slowly since a deadly border clash in 2020. Modi is expected to meet both President Xi Jinping of China and President Vladimir Putin of Russia at a Shanghai Cooperation Organisation summit beginning on Sunday.
Observers said other nations would be watching how India responds to the tariffs. Trump’s latest moves have pushed US–India ties to their lowest point since Washington imposed sanctions on New Delhi after its 1998 nuclear tests. Beyond trade, the dispute could also affect work visas for Indian technology professionals and the offshoring of services.
Even if India eventually succeeds in rolling back some of the tariffs, analysts believe the damage will linger. Competitors such as China, Vietnam, Mexico, Turkey and even smaller nations including Pakistan, Nepal, Guatemala and Kenya could seize market share and potentially lock India out of key sectors even if tariffs are lifted later on.