India has warned that potential new U.S. tariffs targeting countries that purchase Russian oil could affect relations between New Delhi and Washington, after the U.S. House of Representatives approved a sweeping sanctions and tariff package aimed at increasing economic pressure on Russia over the war in Ukraine.
The legislation, which has been sent to President Donald Trump for his signature, would give him authority to impose tariffs of up to 100% on China, India and other countries that continue to purchase Russian energy.
India Defends Its Energy Policy
India’s Ministry of External Affairs said New Delhi had taken note of the legislation and had raised the issue with U.S. officials during discussions in recent months.
The ministry said India had clearly outlined the potential consequences of the proposed measures for bilateral relations and international energy markets.
New Delhi remains committed to ensuring energy security for its population and will continue purchasing supplies from a diverse range of sellers based on market conditions, the ministry said.
The Indian government also stressed that it would take all necessary steps to protect the country’s trade and economic interests, while working closely with industry and trade organizations to address any consequences arising from the new U.S. measures.
Russian Oil Remains Important to India
India, the world’s third-largest oil importer, is among the biggest buyers of Russian crude, which has remained an important source of energy for the country since Russia’s full-scale invasion of Ukraine in 2022 and the subsequent Western sanctions.
New Delhi has repeatedly resisted pressure to significantly reduce its purchases of Russian oil, arguing that the country’s large population and growing economy require secure, affordable and reliable energy supplies.
Indian refiners have already arranged oil shipments for September and October that include Russian crude, according to people familiar with the transactions.
Two refining industry sources said they want the Indian government to raise the issue with U.S. authorities, warning that oil prices could rise sharply if Trump imposes the proposed tariffs.
The sources said oil supplies have already been significantly disrupted by the war in the Middle East, while further restrictions on Russian crude could increase costs for Indian refiners and put additional pressure on their profit margins.
Refiners Seek Exemptions and a Russian Oil Quota
Indian refiners are seeking a more flexible approach instead of an immediate 100% tariff, according to the sources.
They want the government to seek exemptions that would allow existing transactions to be completed and to negotiate a quota permitting India to continue importing a certain volume of Russian oil.
Such an arrangement, they argue, could give refiners time to adjust their supply chains while reducing the immediate impact of any new U.S. restrictions.
Tariffs Could Complicate India-US Trade Talks
The possibility of additional U.S. tariffs is also raising concerns about the future of ongoing India-U.S. trade negotiations.
Indian analysts have warned that Washington could use the threat of tariffs to pressure New Delhi to reduce its purchases of Russian oil, potentially making it more difficult for the two countries to reach a broader trade agreement.
Ajay Srivastava, founder of the Global Trade Research Initiative and a former Indian trade official, said Washington could use the tariff threat as leverage in negotiations over India’s purchases of Russian crude and the broader trade relationship.
After months of negotiations, India and the United States have yet to reach a final agreement on a trade pact, with New Delhi continuing to seek more favorable terms.
G20 Meeting Could Provide Opportunity for Talks
Indian Trade Minister Piyush Goyal is expected to travel to the United States later this month to attend the G20 trade ministers’ meeting.
During the visit, he is expected to hold bilateral talks with U.S. Trade Representative Jamieson Greer, with the future of India-U.S. trade negotiations and the impact of the proposed tariffs likely to be among the issues discussed.
The dispute over Russian oil purchases adds another layer of complexity to the economic relationship between the two countries as both sides seek to resolve outstanding differences over trade and energy policy.
