The story so far: On August 6, U.S. President Donald Trump announced a whopping 25% penalty tariff on Indian goods for India’s import of Russian oil. This was on top of the 25% reciprocal tariffs announced on July 31 after Indian and U.S. negotiators failed to reach a Free Trade Agreement (FTA).
How has India responded to the tariffs?
India has so far not announced any overt action against the U.S. for its tariffs. The 25% reciprocal tariffs went into effect on August 7, and the impact will unfold in the upcoming weeks. Already, reports suggest garment exporters are facing trouble with U.S. importers suspending orders, given that U.S. tariffs on Asian competitors in Vietnam, Pakistan, Bangladesh and Sri Lanka are much lower. Mr. Trump’s penalty tariffs, meanwhile, will go into effect on August 27, and New Delhi is hopeful that there will be some change in position.
As a result, India’s response has been carried in three statements. On August 4, the Ministry of External Affairs (MEA) issued a release criticising both the U.S. and the European Union for “targeting” India over Russian oil imports, pointing out that they both continue to trade with Russia. While the U.S. procures critical minerals, chemicals and nuclear trade components, the EU countries continue to buy oil and LNG from Russia. On August 6, the MEA called the U.S. actions “extremely unfortunate” and “unfair, unjustified and unreasonable”, vowing to protect India’s national interests. On August 7, Prime Minister Modi said that he was ready to pay a price “personally” to protect the interests of India’s farmers, fishermen and livestock, and dairy keepers. This was an indication that India-U.S. trade talks had broken down over market access to the agricultural sector. Between giving in on market access or giving up Russian oil, India appears to be facing two ‘impossible’ choices.
Can the tariffs be stopped?
Mr. Trump has announced that he will meet Russian President Vladimir Putin on August 15 in Alaska, which incidentally will be the first Putin trip to the U.S. since 2015 when he travelled to the UN for a summit. According to reports, Mr. Putin has offered to stop the war in exchange for keeping territories the Russian forces control, but it is unclear if this would be acceptable to Ukraine and European countries. If there is a deal, India may receive a roll back of the Russian oil penalties, and the MEA issued a statement Saturday welcoming and “endorsing” plans for the Trump-Putin Summit. In his executive order of August 6, Mr. Trump has given himself “modification authority”, if Russia were to “take significant steps” to end the Ukraine war and security threats to the U.S.
In addition, a U.S. team of FTA negotiators are scheduled to visit Delhi on August 25. If India makes certain concessions on trade and market access, a mini-trade deal could go a long way in reducing the U.S. tariffs.
How much Russian oil does India procure?
Prior to Russia’s invasion of Ukraine in February 2022, India imported very little oil from Russia. Ural oil, considered “heavy” crude and priced too high as Russia had European buyers, consisted only 1% of India’s basket of sellers. After the EU began to sanction Russia, and committed to zeroing out all energy purchases from Russia, the price of Ural dropped, and India, as well as China and others, began to pick up more Russian oil.
By May 2023, India was importing two million plus barrels of Russian crude per day (bpd), making up between 35-40% of India’s basket. Russia has been its largest supplier since. However, India-Russia energy ties go beyond this trade. After the Modi-Putin summit in Sochi in May 2018, and Mr. Putin’s visit to India for the annual summit that year, the India-Russia joint statement recorded investments of over $5 billion by an Indian consortium of PSUs in Vankorneft and Taas-Yuryakh Neftegazodobycha in Russia. Russian oil major Rosneft picked up a 49% stake in Essar Oil for $12.9 billion. The new entity was renamed Nayara Energy, and it included Essar’s Vadinar refinery in Gujarat — 49% stake went to a consortium, and Essar retained 2%. Vadinar refinery, along with other private refiners like Reliance, began to reprocess Russian oil and export it to other countries over the next few years. Mr. Trump called this, “selling it on the open markets for big profits”. None of this violated any sanctions, and despite requests from Western countries, the government continued to purchase oil from Russia, saving India about $13 billion by 2024 and a further $3.8 billion in 2025, according to estimates by the ICRA.
Experts say it will be difficult for the government to give in to U.S. pressure this time, economically as well as politically and diplomatically. The Indian government would lose face domestically, and risk damaging ties with an all-important friend, Russia. For the moment, Kpler reports that the price of Ural has dropped after demand has reduced from Indian companies, but experts say it is unlikely to completely stop Russian imports, even as India broadens its non-Russian intake through the U.S., Iraq, Kuwait, UAE and Saudi Arabia.
What happened with oil imports from Iran?
India’s refusal to stop importing Russian oil was a shift from 2018, when Mr. Trump had demanded India’s compliance in “zeroing out” oil from Iran and Venezuela. After initially maintaining that India would not bow to such diktats, the government caved in by May 2019, and stopped all its direct oil purchases from both Iran and Venezuela, incurring heavy losses, as the oil was both “sweet” for its refineries and priced competitively.
What does this mean for foreign policy?
Since 1999, after the U.S. placed sanctions on India for nuclear tests, Delhi and Washington have worked tirelessly to change relations between them. They have built trust for a quarter of a century through a civil nuclear deal, military and defence cooperation, counter-terror cooperation, technology partnerships and the Quad grouping in the Indo-Pacific. Experts in both countries say that besides hurting Indian trade, Mr. Trump’s actions will damage the India-U.S. relationship in several other areas. At the same time, Delhi’s moves to shore up strategic autonomy and independence are significant. National Security Adviser Ajit Doval travelled to Moscow last week to prepare for Mr. Putin’s visit to India, and External Affairs Minister S. Jaishankar is expected to follow later in the month.
Mr. Modi will travel to Japan and then to China for the Shanghai Cooperation Organisation (SCO) summit and a bilateral meeting with President Xi Jinping, on his first such visit since the 2020 LAC (Line of Actual Control) military clashes. Moreover, Delhi is due to host the Quad summit this November, and much will depend on whether Mr. Modi and Mr. Trump can restore ties by then.
Published – August 10, 2025 03:35 am IST
