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Reuters

Indian Prime Minister Narendra Modi is caught in an energy policy bind with no easy exit.
Cutting Russian oil imports to avoid potential new US tariffs could increase fuel prices ahead of key regional elections, or stress government finances. Maintaining such purchases could cripple Indian exports to its largest market.
India, the world’s third-largest oil importer and among the biggest buyers of Russian crude, reacted unusually strongly on Thursday to a US congressional bill that would allow Washington to impose tariffs of up to 100 per cent on countries, including India and China, for major purchases of Russian oil.
The sharp response showed how an energy trade that has delivered India billions of dollars in savings since Russia’s invasion of Ukraine in 2022 is now colliding with its broader strategic and commercial interests.

New Delhi said it had warned the United States that the measure could damage bilateral relations and disrupt global energy markets, vowing to keep “ensuring energy security for its 1.4 billion people” by buying from diversified sources.
But holding firm could further strain ties with Washington after a turbulent year marked by repeated disputes over trade and tariffs under President Donald Trump. A planned trade deal between the two countries has already faced multiple delays.
Two Indian sources said the latest tensions did not mean Delhi would abandon hopes of striking a trade deal with Washington, though they said India might increasingly need to lean on deals elsewhere if additional US tariffs hit exports.
Since last year, India has signed a trade deal with Britain, finalised one with the EU and is looking to conclude talks on another one with Canada by the end of the year.
Delhi is hoping for a breakthrough when Modi travels to the US for the G20 summit in December, where he could meet Trump on the sidelines, according to one of the sources.
The White House and the Indian government did not immediately respond to requests for comment.
‘Biggest blow yet’
“The US-India relationship has suffered over the last year for a range of reasons, including US tariffs,” said Michael Kugelman, a senior fellow at the Atlantic Council in Washington.
“But this new legislation, which enjoyed strong bipartisan support and takes the most maximalist position possible on punishing India for its Russian oil buys, may be the biggest blow yet.”
If Washington delayed implementing tariffs or applied them only lightly, the damage could be manageable, he said, adding the legislation nevertheless could widen the trust gap in Delhi for a trade deal and make it harder for Indian negotiators to agree to last-minute concessions needed to secure a deal.
“From the perspective of the trade talks, this new legislation couldn’t have come at a worse time,” he said. “The two sides are not far from the finish line, but getting there will require careful diplomacy.”
The bill has already become a political issue in India, with the opposition urging Modi to adopt a tougher stance. Any hike in pump prices would be risky for Modi, whose party faces elections in India’s most populous state of Uttar Pradesh, Punjab and Modi’s home state of Gujarat starting early next year. Modi’s Bharatiya Janata Party runs both Uttar Pradesh and Gujarat.

Before Trump, India was courted by the United States for decades as a strategic counterweight to China, but the world’s fifth-largest economy has repeatedly been left reeling over the past year by decisions taken in Washington.
After Russia’s invasion of Ukraine, India sharply increased purchases of discounted Russian crude, which now account for more than 40 per cent of India’s overall oil supplies. The stepped-up purchases were partly the reason Trump imposed tariffs of as much as 50 per cent on Indian goods in August 2025, among the steepest levied on any country.
In February, Trump rolled back those duties in exchange for what he said was India’s commitment to halt Russian oil purchases and lower trade barriers.
But Delhi only briefly reduced purchases from Russia early this year. They have since jumped, especially since the supply shock that followed the US and Israeli attacks on Iran.
Delhi has repeatedly resisted pressure to scale back purchases, arguing that its large population and growing economy need secure, affordable and reliable energy supplies. Indian refiners have already secured crude supplies for September and October that include Russian oil, according to sources familiar with the matter.
Indian analysts said the country’s purchases of Russian oil were not financing the Ukraine war, but only helping stabilise global supplies and keeping domestic prices in check.
“Tariffs of up to 100 per cent would punish Indian exporters and American consumers, disrupt trade and give the US president excessive power over major partners,” said Ajay Srivastava, founder of Delhi-based think tank Global Trade Research Initiative and a former trade ministry official.


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Cutting Russian oil imports could avoid price rises ahead of key polls but keeping such purchases could cripple access to its largest market


Cutting Russian oil imports could avoid price rises ahead of key polls but keeping such purchases could cripple access to its largest market.


India’s Modi caught between Russian oil needs and US trade threats

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Cutting Russian oil imports could avoid price rises ahead of key polls but keeping such purchases could cripple access to its largest market

Cutting Russian oil imports could avoid price rises ahead of key polls but keeping such purchases could cripple access to its largest market