Key facts
- The US House of Representatives passed legislation that could impose tariffs of up to 100% on countries buying Russian oil and gas.
- India and China are among the largest buyers of Russian oil.
- Russia supplied 30.3% of India's crude imports in fiscal year 2026, valued at $40.8 billion.
- In July, Russian crude accounted for over half of India's oil imports.
- The US imported about $104 billion of goods from India in 2025.
- India has saved approximately $12.6 billion from its post-2022 shift to Russian crude.
The US House of Representatives has passed a bill that could impose tariffs of up to 100% on countries that purchase Russian oil and gas, presenting a significant geopolitical challenge for India, a major importer of Russian crude. This legislation, which now heads to President Donald Trump's desk, targets nations that have benefited from discounted Russian oil following the invasion of Ukraine.
India and China are identified as the most exposed countries due to their substantial purchases of Russian energy. Between December 2022 and August 2026, China accounted for half of Russia's crude exports, with India following at 37%, according to the Centre for Research on Energy and Clean Air (CREA). For India, Russia was the largest supplier of crude oil in fiscal year 2026, providing 30.3% of its imports, valued at $40.8 billion out of a total $134.7 billion import bill. In July, Russian crude constituted more than half of India's imports, significantly outpacing other suppliers like the UAE, Saudi Arabia, and the US.
Ajay Srivastava, a former Indian trade official and head of the Global Trade Research Initiative (GTRI), criticized the bill as a "blunt and dangerous attempt to pressurise India to sign the bilateral trade agreement on one-sided terms." He argued that India's purchases are aimed at securing affordable energy for its population and have helped stabilize global supplies and prices, rather than financing the war.
The economic attractiveness of Russian oil has diminished, with steeper discounts fading and increased risks associated with shipping, insurance, and sanctions. Democratic Senator Richard Blumenthal advised India and China to seek energy sources elsewhere. While countries typically have 180 days to comply with such measures, the president can shorten this period.
India's government stated it is "monitoring further developments" and remains "firmly committed to ensuring energy security." The potential implications for the bilateral relationship and the international energy market have been clearly communicated to US officials. S&P Global noted that securing alternative supplies would likely entail higher crude, freight, and insurance costs, alongside longer shipping routes.
The proposed tariffs would directly impact Indian exporters, the rupee, refinery margins, and the overall trade balance. Michael Kugelman of the Atlantic Council highlighted that the bill could have "major problematic impacts for India, and at the worst possible time, amid sensitive final-stage trade talks and shaky broader relations." While India has sought to mitigate tariff impacts through new trade deals and its partnership with China, tariffs of up to 100% from a critical export market like the US pose a significant threat.
The US imported approximately $104 billion of goods from India in 2025, with total bilateral trade in goods and services around $240 billion. Indian exports to the US include electronics, pharmaceuticals, machinery, and textiles. This new threat follows previous US tariffs on Indian goods that peaked at 50% in 2025.
India faces a difficult calculation: balancing the savings from Russian crude against the risk to its US exports. The final decision will depend on factors such as the Russian discount, global crude prices, freight and insurance costs, the specific tariff imposed by Trump, and potential exemptions or broader settlements. The situation is further complicated by India's role as an exporter of refined fuels, some of which are derived from Russian crude. Ukrainian strikes on Russian refineries have increased Russia's need to import fuel, with India supplying a significant portion.