India’s $17 Billion Russian Oil Gains at Risk as Trump’s Punitive 50% Tariffs Threaten Exports, Jobs, and Geopolitical Balance Between Washington and Moscow.
New Delhi: India’s strategic decision to boost imports of discounted Russian crude since early 2022 has helped the country save an estimated $17 billion. Yet, with US President Donald Trump’s newly imposed tariffs up to 50% on Indian goods coming into force, those gains could be swiftly erased, leaving New Delhi with few easy options.
According to the Global Trade Research Initiative (GTRI), the tariffs could slash Indian exports by more than 40%, or nearly $37 billion, in the April-March fiscal year alone. Analysts warn that the repercussions could be prolonged and politically challenging for Prime Minister Narendra Modi, putting thousands of jobs at risk across labour-intensive sectors such as textiles, gems, and jewellery.
Balancing Ties with Russia and the US
The tariffs have sparked urgent discussions in New Delhi about recalibrating decades-old relations with Russia while preserving an increasingly complex partnership with the United States, which Washington considers crucial to countering China in the Indo-Pacific.
“India needs Russia for defence equipment for several more years, discounted oil when available, geopolitical support in the continental space, and political backing on sensitive matters,” noted Happymon Jacob, founder of Delhi’s Council for Strategic and Defence Research. “That makes Russia an invaluable partner for India.”
Yet, Jacob added, “Despite the challenges under Trump, the United States remains India’s most important strategic partner. India cannot simply choose one over the other at least not yet.”
Government sources indicate that New Delhi seeks to repair ties with Washington, remains open to increasing purchases of US energy, but is reluctant to halt Russian oil imports entirely. Ongoing virtual discussions between the two nations cover trade, energy security including nuclear cooperation and exploration of critical minerals.
Economic and Market Implications
Russian crude now makes up nearly 40% of India’s total oil imports, up from almost zero before the Ukraine war. Analysts caution that an immediate halt to purchases would not only signal acquiescence under US pressure but also be economically unfeasible. Reliance Industries, led by billionaire Mukesh Ambani, remains the primary buyer, operating India’s largest refining hub in Gujarat.
Government estimates suggest that stopping Russian oil imports could drive global crude prices to nearly $200 a barrel and erase the up-to-7% discount India currently enjoys. India has also criticized the US for double standards, pointing out that countries such as China, which increased Russian oil purchases, have not faced similar penalties, while the US itself continues importing Russian uranium, palladium, and fertilizers.
US Treasury Secretary Scott Bessent has accused India of profiteering from its Russian oil imports, calling it unacceptable. In response, India maintains that its imports ensure predictable and affordable energy for consumers and are a necessity compelled by global market conditions. Halting Russian oil currently around 2 million barrels per day could destabilize the domestic fuel supply and spike prices, the government warns.
Political and Domestic Stakes
PM Modi has not publicly commented on the tariffs but has reaffirmed support for Indian farmers, interpreted as a subtle response to US demands on agricultural market access. With Bihar elections approaching, Modi has promised GST cuts by October to stimulate domestic demand.
Trilateral Diplomacy and Global Watch
In recent days, senior Indian officials have visited Russia, while PM Modi plans to visit China this month the first in over seven years to attend the Shanghai Cooperation Organisation (SCO) summit, where he will meet both Presidents Xi Jinping and Vladimir Putin. However, sources indicate India is cautious in engaging with China and is not currently considering a trilateral summit with Russia, as initially hoped.
Experts say India’s response to US tariffs could set a precedent for other countries. “If India a major emerging power cannot withstand US pressure, smaller nations may find themselves even more constrained,” said Jacob. “Conversely, some may see China as a potential counterbalance given the US’s aggressive and unpredictable moves.”
International relations analysts warn that Trump’s actions have potentially pushed US-India relations to their lowest point since the 1998 nuclear sanctions. Beyond trade, the dispute could affect work visas for Indian tech professionals and offshoring arrangements.
Even if some tariffs are eventually rolled back, the repercussions may linger. “Competitors such as China, Vietnam, Mexico, Turkey, and even Pakistan, Nepal, Guatemala, and Kenya stand to gain, potentially locking India out of key markets even after tariffs are reversed,” cautioned GTRI founder Ajay Srivastava, a former Indian trade official.
The coming weeks will be critical as India navigates its dual commitments to Russia and the US, balancing economic imperatives with geopolitical strategy.