RESOLVING THE LEDGER
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See the full story · 1 sourcesOn August 5, 2025, US President Donald Trump announced 25% penal tariffs on India for its purchase of crude oil from Russia. One year later, India faces the prospect of up to 100% tariffs for its Russian crude oil purchases! A lot has changed in the last year, yet when it comes to tariffs related to Russian crude - the Trump administration seems to have come full circle.India faced with 50% tariffs (25% reciprocal and 25% penal) did not stop procuring Russian crude. In October 2025, the US announced sanctions on some Russian oil firms. This led to a decline in oil purchases from Russia as lower quantities of non-sanctioned crude were available. In February this year, India and the US announced an interim trade deal framework agreement, which reduced tariffs on India to 25% and also removed the 25% penal tariffs for Russian crude purchases. Trump claimed India would stop buying crude from Moscow, but that never happened as the Middle East Conflict began.A year since the whole penal tariff cycle began - India now faces uncertainty related to its Russian crude purchases. A new Russia related sanctions bill in the US may see the light of the day if passed this year implying that Trump would have the power to impose tariffs on India again.What’s the bill about, what powers does it give the US President? Will India face new tariffs and importantly, will it stop buying Russian crude oil?What the Russia Sanctions Bill proposesThe proposed Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, if passed, will give the US President the authority to impose tariffs of up to 100% on countries that buy crude oil and gas from Russia in big quantities. The decision on whether such a tariff should be imposed rests with the American President.Before deciding on tariffs, the US Trade Representative (USTR) will review the countries which are the five largest importers of Russian energy. This review will happen every 180 days and then the US President will decide on whether a tariff should be imposed. The Bill allows for both penal tariffs and exemptions, depending on what the US President decides.Those countries that import less than 15% of their total energy needs from Russia and also show efforts to reduce the dependence will be eligible for an exemption from the tariffs. The bill also proposes secondary sanctions on shipping companies, insurers and vessels that are linked to Russia’s ‘shadow fleet’. At present the list of top five importers of Russian energy is likely to include China, India, Slovakia, Hungary and Azerbaijan.Importance of Russian crude For IndiaThe Bill comes at a time when India’s dependence on Russian crude oil imports has gone up and is touching record highs. Russia was never a major oil supplier for India but after Moscow’s war with Ukraine began and Europe stopped buying Russian crude, it became available at huge discounts for India.(function(){function e(){window.addEventListener(`message`,function(e){if(e.data[`datawrapper-height`]!==void 0){var t=document.querySelectorAll(`iframe`);for(var n in e.data[`datawrapper-height`])for(var r=0,i;i=t[r];r++)if(i.contentWindow===e.source){var a=e.data[`datawrapper-height`][n]+`px`;i.style.height=a}}})}e()})();Since 2022, Russia’s oil exports to India have steadily gone up and the share in India’s overall crude oil imports has been above 30% for over three years now. It was only in early 2026 when India’s oil imports from Russia went down after the US imposed sanctions on Russian majors Lukoil and Rosneft. Before a clear trend could emerge, the US-Iran war started, rendering Middle East oil inaccessible. As India stepped up oil purchases from Russia, the US also waived sanctions on Russian crude. The waiver has since then lapsed but India continues to buy Russian crude in large quantities with numbers touching record highs in recent months.Experts note that Russian crude has become the cornerstone of India’s crude oil procurement. So this raises the important question: Can and will India stop buying Russian crude if Trump announced penal tariffs?Realistic chance of Russian crude disappearing from India's imports?No. Russia supplied approximately 55% of India's crude imports in July, the highest share seen since India began large-scale purchases following the Ukraine conflict. Russian crude remains important from both energy security and refining economics perspectives.Hence, experts see a complete halt to Russian crude imports as an unlikely scenario in the near term.Kpler’s Sumit Ritolia doesn’t see dependence on Russian crude coming down any time soon, especially given the disruptions in the Middle East.“Russian crude has been India's best hedge against supply disruptions over the past few years and now accounts for roughly 50% of its crude imports. Beyond attractive economics, it has provided reliable supply security despite fluctuations in discounts,” Ritolia tells TOI.“Indian refiners are unlikely to abandon Russian barrels overnight unless sanctions materially disrupt shipping, insurance or payment mechanisms. Any reduction would likely be gradual rather than abrupt,” he says.(function(){function e(){window.addEventListener(`message`,function(e){if(e.data[`datawrapper-height`]!==void 0){var t=document.querySelectorAll(`iframe`);for(var n in e.data[`datawrapper-height`])for(var r=0,i;i=t[r];r++)if(i.contentWindow===e.source){var a=e.data[`datawrapper-height`][n]+`px`;i.style.height=a}}})}e()})();Prashant Vashisht, Senior Vice President at ICRA is of the view that India will not stop buying Russian crude oil unless and until it is sanctioned.“Last year when the 25% penal tariffs were imposed, India continued to buy from Russia and the supplies reduced only when Russian oil majors were sanctioned, making the crude economically unviable. Traditionally, India has not bought sanctioned oil, whether from Iran, Venezuela or Russia. But tariffs by themselves are unlikely to be a deterrent,” he tells TOI.According to Praveen Rai, Director...
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