Tariff Threat Over Russian Oil Puts India at a Strategic Crossroads: GTRI

India’s growing dependence on discounted Russian crude could face new challenges amid the threat of tariff action by the United States. This will place India at a critical strategic juncture in its energy and trade policy, according to the Global Trade Research Initiative (GTRI).

The think tank said that while Russian oil has helped India manage inflation and energy costs over the past two years, potential trade penalties linked to geopolitical alignments could complicate the country’s crude sourcing strategy going ahead.

Russian Oil and India’s Energy Calculus 

Since the onset of the Russia-Ukraine conflict, India has significantly increased purchases of Russian crude and has been benefiting from lower prices and flexible methods of payment. These imports have played a key role in stabilising domestic fuel supplies and protecting the economy from global oil price volatility.

However, GTRI cautioned that continued reliance on Russian barrels could expose India to trade-related risks, especially if the US adopts tougher tariffs or compliance measures targeting countries seen as indirectly supporting Moscow’s energy revenues. 

Also read: US Move on Venezuela Oil Could Help India Recover Nearly $1 Billion 

Tariff Risks and Trade Implications

According to GTRI, any move by the US to impose tariffs or trade restrictions linked to Russian oil transactions would place India in a difficult position. Balancing affordable energy needs against broader trade and diplomatic interests.

Such measures could impact Indian exports to the US or complicate financial and shipping arrangements, thus increasing costs across supply chains even if crude imports themselves are not directly sanctioned.

Limited Alternatives in the Short Term 

The report noted that replacing Russian oil entirely would not be easy in the near term. Indian refiners have reconfigured operations to process Russian grades efficiently, and alternative suppliers may not offer comparable pricing or volumes without impacting the country’s import bill.

GTRI said diversification efforts are underway. However, a sudden shift could raise procurement costs and pressure domestic fuel prices. It also emphasised that energy security, trade competitiveness and geopolitical alignment will need to be balanced carefully as global pressures evolve.

Also read: US Senator Claims Indian Diplomat Asked for Tariff Concessions