India’s strategy of importing discounted Russian oil since the Ukraine war—saving an estimated $17 billion—faces a major setback after fresh U.S. tariffs of up to 50% on Indian goods took effect Wednesday. Trade experts warn the move could slash exports by more than 40% this fiscal year, wiping out $37 billion in revenue and threatening jobs in key sectors like textiles, gems, and jewellery.
According to the Global Trade Research Initiative (GTRI), the impact will be “lingering” and could be politically damaging for Prime Minister Narendra Modi, who faces upcoming state elections. The tariffs come amid a complex balancing act for New Delhi, which relies on Russia for defence supplies, cheap oil, and diplomatic backing, while counting the U.S. as its most important strategic partner.
“India simply doesn’t have the luxury of choosing one over the other, at least not yet,” said Happymon Jacob, founder of the Council for Strategic and Defence Research.
Two government sources told Reuters that India is willing to expand U.S. energy purchases but will not fully halt Russian oil imports, which now make up 40% of total crude purchases. Any abrupt stop, officials warn, could push global prices towards $200 a barrel and disrupt domestic fuel supply chains.
Billionaire Mukesh Ambani’s Reliance Industries remains the top buyer, refining Russian crude at its Gujarat complex. India also receives up to a 7% discount on these shipments compared to global benchmarks.
Tensions have risen after India accused Washington of “double standards” for singling it out while importing Russian uranium, palladium, and fertilisers. The U.S. Treasury has labelled India’s surge in Russian oil imports as profiteering—charges New Delhi rejects, saying the imports are “a necessity compelled by the global market situation.”
The dispute could strain ties beyond trade, potentially affecting U.S. work visas and offshoring for Indian tech firms. GTRI warns that competitors like China, Vietnam, and Mexico could seize India’s market share, even if some tariffs are eventually reversed.
Meanwhile, New Delhi has intensified high-level diplomacy, with officials visiting Russia and Modi preparing to attend the Shanghai Cooperation Organisation summit in China, where he will meet Presidents Vladimir Putin and Xi Jinping. Analysts say other countries will be watching India’s response closely, viewing it as a test of how even major economies handle U.S. trade pressure.
