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US Tariff Threat Over Russian Oil Puts India in a Strategic Bind

The US has warned India it could raise tariffs on Indian imports if New Delhi continues purchasing Russian crude oil. This pressure is being reinforced in the US Congress, where legislation for secondary tariffs is being considered. A GTRI report states that India's current ambiguous stance places it in a "strategic grey zone," weakening its negotiating position. The report urges India to make a clear, decisive policy on Russian oil and communicate it to Washington to avoid further economic damage.

Key Points: India's Russian Oil Purchases Trigger US Tariff Threat

  • US threatens higher tariffs over Russian oil
  • Indian exports to US already down 20.7%
  • Congress mulls secondary sanctions
  • India in a "strategic grey zone"
  • Pressure may shift to agriculture, digital trade
2 min read

Tariff threat over Russian oil puts India at crossroads: GTRI

GTRI report warns India faces critical policy choice on Russian oil imports as US threatens higher tariffs, risking a 20.7% export decline.

"As the tariff threat hardens, India must take a clean call on Russian oil, own that decision, and communicate it unambiguously to Washington. - GTRI"

New Delhi, January 5

As the United States steps up pressure on countries buying Russian oil, India faces a critical policy choice, with continued ambiguity likely to invite higher trade costs, according to a report by the Global Trade Research Initiative.

On January 4, US President Donald Trump warned that Washington could raise tariffs on Indian imports if New Delhi does not stop purchasing Russian crude. The warning comes even as Indian exports to the US are already subject to a 50 per cent import tariff, half of which is directly linked to India's Russian oil purchases, the report noted.

The pressure is being reinforced in the US Congress, where Senator Lindsey Graham is pushing legislation to impose secondary tariffs on countries buying Russian oil and gas if Moscow fails to agree to a ceasefire in Ukraine within 50 days.

Following US sanctions imposed in October on Russian energy giants Rosneft and Lukoil, major Indian refiners, including Reliance Industries and several state-owned firms, announced a halt to Russian oil purchases to avoid secondary sanctions. However, imports have not stopped entirely, with lower volumes continuing from non-sanctioned suppliers, placing India in what the report described as a "strategic grey zone."

GTRI said this ambiguity is weakening India's position. "If India plans to stop Russian oil imports, it should do so clearly and decisively. If it intends to continue buying from non-sanctioned suppliers, it must say so openly and support the stance with data," the report said, adding that continued lack of clarity is no longer viable.

The report also cautioned that ending Russian oil imports may not guarantee relief from US pressure, as trade demands could shift to other areas such as agriculture, dairy, digital trade and data governance.

India must also consider that the current tariff pressure is linked to a specific political phase in Washington, which may not last indefinitely, GTRI said. While the European Union, Japan and South Korea chose to cut Russian oil imports to ease tensions with the US, China, the largest buyer of Russian crude, has faced little pressure due to its strategic leverage.

Indian exports to the US have already declined by 20.7 per cent between May and November 2025, and any further tariff escalation could deepen the slowdown, the report warned.

"As the tariff threat hardens, India must take a clean call on Russian oil, own that decision, and communicate it unambiguously to Washington," GTRI said.

- ANI

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Reader Comments

P
Priya S
The GTRI report makes a valid point about ambiguity. Our foreign policy needs to be more decisive. We can't keep playing both sides forever. A clear stance, whichever way it goes, will at least give our businesses some certainty to plan. This "strategic grey zone" is hurting our exporters.
R
Rohit P
Already a 20.7% drop in exports to the US? That's alarming for jobs and our economy. We need to diversify our trade partners quickly. Maybe focus more on Europe, Africa, and our own neighborhood. Can't put all our eggs in the American basket.
S
Sarah B
While I understand India's need for affordable energy, there's a larger moral question here about funding Russia's war. I respect India's sovereign decisions, but hope our government also considers the humanitarian aspect. Perhaps accelerating our green energy transition is the long-term way out of this bind.
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Vikram M
The report is right. Even if we stop Russian oil, the US will find another issue—dairy, digital taxes, something else. Their goal is to reduce the trade deficit with us. We need a strong, unified negotiation strategy, not reactive policy shifts every time Washington blinks.
K
Kavya N
It's a tough spot. On one hand, cheap oil benefits every common person through lower prices. On the other, losing the US market hurts our industries and IT sector. Maybe a phased reduction while securing alternatives from the Middle East is the practical middle path? đŸ¤”

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