The mounting pressure from the United States on India to curb imports of Russian oil, the announcement of penalty tariffs by then U.S. President Donald Trump, India’s diplomatic stance, and the geopolitical-economic consequences of this standoff.
U.S. Penalty Tariffs on India
On August 6, U.S. President Donald Trump announced a 25% penalty tariff on Indian goods for importing Russian oil. This was in addition to the 25% reciprocal tariffs announced earlier on July 31, during trade talks between U.S. and Indian negotiators aimed at reaching a Free Trade Agreement (FTA). These tariffs are set to take effect August 27, impacting trade in the coming weeks.
Trump’s strategy: Use economic measures to pressure India into reducing Russian oil purchases and align with U.S. policy on Ukraine.
India’s Response to the Tariffs
India’s reaction has been measured and focused on diplomatic communication rather than retaliatory measures:
1. Official Statement by MEA (Aug 4) – Criticized both the U.S. and the European Union for “targeting” India over Russian oil while both blocs continue importing critical materials, energy, and goods from Russia.
2. Condemnation of U.S. Action (Aug 6) – Called the U.S. decision “extremely unfortunate,” “unfair, unjustified, and unreasonable,” claiming it violates Indian sovereignty.
3. PM Modi’s Statement (Aug 7) – Asserted India’s readiness to protect farmers, herders, and industry, and condemned market access restrictions in the agricultural sector.
India is hopeful that U.S. trade positions may soften before August 27, with negotiations ongoing.
Potential for Tariff Reversal
Trump–Putin Meeting: Scheduled for August 15 in Alaska during Putin’s first U.S. visit since 2015. The U.S. may offer a deal: easing penalties in return for Russian concessions on Ukraine and European security. If agreement happens – Possible rollback of U.S. penalties on India. If not – Penalties will proceed, and tensions could deepen.
Upcoming Negotiations
FTA Talks: Scheduled for August 25 in Delhi. If successful, could include mini-trade deals to reduce U.S. tariffs and address agricultural market disputes.
How Much Russian Oil Does India Import?
Before the Ukraine war (pre-Feb 2022):
India imported very little crude oil from Russia (mostly heavy, high-priced oil) due to higher shipping costs. Russia was not a major energy partner for India compared to Gulf suppliers.
After the Ukraine war & Western sanctions:
Russia redirected oil exports to Asia, especially India and China. By May 2023, India imported two million barrels/day from Russia, making up 35–40% of its oil supply.
Russia became India’s largest single crude oil supplier.
Reason for surge:
India buys Russian oil at a discount due to Western sanctions limiting Russia’s market access.
Indian companies like Indian Oil Corporation (IOC) and Bharat Petroleum (BPCL) increased purchases, especially from ports like Vadinar (Essar).
India’s Strategic Energy Approach
India has diversified suppliers — imports also come from the U.S., Iraq, Kuwait, UAE, Saudi Arabia.
Despite Western criticism, India argues:
• Purchases are economic, not political.
• Cheaper oil helps control inflation and supports energy security.
• The U.S. and EU also buy Russian goods indirectly, so criticism is hypocritical.
Iran Oil Factor
Historical context: In 2018, the U.S. forced India to stop importing from Iran as part of sanctions. Trump’s demand: End purchases from both Iran and Venezuela. India initially complied, replacing Iranian oil with U.S. crude, but this increased costs and reduced supply security. The Iran precedent is now being cited by Indian policymakers as a warning against over-dependence on U.S. energy politics.
Implications for Foreign Policy
Since 1999, U.S.–India relations have been improving, with strong cooperation in nuclear energy, defense, and counterterrorism. The oil dispute risks derailing diplomatic trust and shifting India closer to Russia or other suppliers.
Analysts note:
India sees itself as a strategic partner, not a subordinate. The U.S. should avoid pressuring India publicly, which could trigger nationalist pushback.
India’s Balancing Act
Economic needs vs. geopolitical pressure:
• Cheap Russian oil is vital for India’s economic stability.
• But U.S. tariffs could hurt exports and trade relations.
Diplomatic strategy:
• Continue importing Russian oil while negotiating to reduce U.S. penalties.
• Highlight Western double standards in dealing with Russia.
• Keep diverse suppliers to prevent over-dependence on any single source.
Key Takeaways
1. U.S. announced 25% penalty tariffs on Indian goods over Russian oil imports.
2. India imports 35–40% of its crude from Russia post-Ukraine war, making Russia the top supplier.
3. India has not reduced Russian oil imports despite U.S. pressure.
4. FTA talks on August 25 could help ease tariffs.
5. India accuses U.S. and EU of hypocrisy, as they also buy Russian goods indirectly.
6. Strategic energy independence remains India’s priority.
7. The standoff may strain U.S.–India relations if unresolved before tariff implementation.
The News Grit, 15/08/2025 - By Unnati Vaishnav
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