India became the biggest buyer of discounted Russian seaborne crude following the 2022 outbreak of the Ukraine war. But those purchases have fuelled a backlash from Western nations, which have targeted Russia’s energy sector with sanctions, arguing that oil revenues help fund Moscow’s war effort.
The United States, which was already looking to narrow its trade deficit with India, doubled import tariffs on Indian goods to 50% last year as punishment for its heavy purchasing of Russian oil. The two countries are currently negotiating a potential trade deal, though those talks have been fraught at times.
Russian oil issue
Though many major world economies have succeeded in striking trade deals with Washington that reduced U.S. President Donald Trump’s initial crippling tariff rates, talks between New Delhi and Washington have so far failed to produce an agreement.
Negotiations collapsed in late July after India resisted opening its market for U.S. farm products and denied Trump’s role in mediating during a brief conflict between India and Pakistan. Trump, meanwhile, doubled the tariff rates on Indian goods in August.
Trump and Modi have continued to talk, however, and negotiations have resumed, though India’s Russian oil purchases remain a stumbling block.
While Trump said in October that Modi had pledged to stop buying Russian oil, New Delhi has publicly resisted U.S. pressure, arguing that Russian imports are vital to its energy security.Stricter U.S. and European Union sanctions have already slowed Russian oil flows to India, which fell to a three-year low of about 1.2 million bpd in December, according to sources and analytics firm Kpler. That marks a roughly 40% drop from a June peak of around 2 million bpd.
