India’s Russian Oil Gains Wiped Out by U.S. Tariffs, Threatening Trade and Jobs

Sana Khan

The U.S. imposed punitive tariffs of up to 50% on Indian imports, effective Wednesday, targeting India’s trade and potentially undoing the gains from Russian oil purchases.

Background
According to an analysis by Reuters, India benefited financially from increased imports of discounted Russian oil after the outbreak of the war in Ukraine, saving billions of dollars. Russian crude now accounts for nearly 40% of India’s total oil purchases, up from virtually zero before the conflict. At the same time, India’s economic and strategic ties with both Russia and the U.S. have become increasingly complex.

What Happened:
The U.S. imposed punitive tariffs of up to 50% on Indian imports, effective Wednesday, targeting India’s trade and potentially undoing the gains from Russian oil purchases. Analysts estimate India has saved at least $17 billion from these imports since early 2022, while the tariffs could slash exports by over 40%, amounting to nearly $37 billion in the April–March fiscal year, according to New Delhi think-tank Global Trade Research Initiative (GTRI).

Why It Matters:
The tariffs threaten thousands of jobs in labour-intensive sectors such as textiles, gems, and jewellery. Stopping Russian oil imports could spike global crude prices to $200 per barrel and eliminate discounts of up to 7% India currently enjoys. The development also complicates India’s geopolitical balancing act: it depends on Russia for defence equipment and cheap oil but sees the U.S. as its most important strategic partner, especially in countering China’s influence in the Indo-Pacific.

Stakeholder Reactions:

Happymon Jacob, founder of the Council for Strategic and Defence Research in Delhi, said: “India needs Russia for defence equipment for several more years, cheap oil when available, geopolitical support in the continental space and political backing on sensitive matters. That makes Russia an invaluable partner for India.”

U.S. Treasury Secretary Scott Bessent accused India of profiteering from its Russian oil imports, calling it unacceptable

Indian officials stressed the purchases are “meant to ensure predictable and affordable energy costs to the Indian consumer” and criticized perceived U.S. double standards, noting China’s Russian oil purchases have not been penalized.

What’s Next:
India is engaged in discussions with the U.S. on trade, energy security, nuclear cooperation, and critical minerals exploration. Prime Minister Modi is also set to attend the Shanghai Cooperation Organisation summit, meeting both President Xi Jinping of China and President Vladimir Putin of Russia. Analysts say India’s response to the tariffs could reshape its partnerships with both global powers and influence other countries’ calculations regarding U.S. pressure.