India vows to protect interests, as US clears bill to punish Russian oil buyers

The US House of Representatives late Wednesday passed a bipartisan sanctions bill targeting Russia over the Ukraine war, giving President Donald Trump the power to slap up to 100% tariffs on countries such as India and China for their energy imports from Russia.

New Delhi: India will take all necessary steps to safeguard its energy security and economic interests, the government said on Thursday, stressing that it had apprised Washington of the likely impact the proposed US law targeting Russian energy-importing countries could have on bilateral ties and the global oil market.

The development comes as crude oil prices topped the $100 a barrel level amid the prolonged West Asia conflict, adding to concerns for India, which imports about 90% of its crude oil, more than a third of it from Russia.

The US House of Representatives late Wednesday passed a bipartisan sanctions bill targeting Russia over the Ukraine war, giving President Donald Trump the power to slap up to 100% tariffs on countries such as India and China for their energy imports from Russia. The US Senate had already passed the bill. It is expected to be soon signed by Trump to become a law.

"India has noted the passage of the Sanctioning Russia and Iran Act in the US Congress and it is monitoring further developments on this matter," the ministry of external affairs said in a statement. “This issue has been discussed at high levels in recent months with various US interlocutors. Its potential implications for not just the bilateral relationship but also the international energy market have been very clearly articulated by the Indian side.”

Determined to take "all necessary measures" to protect its interests, the government said it will work closely with domestic trade and industry bodies to deal with the implications.

"As stated on several earlier occasions, India remains firmly committed to ensuring energy security for its 1.4 billion people. It will continue to do so through diversified sourcing and on the basis of evolving market dynamics," the ministry said.

Indian trade and foreign affairs analysts warn that Trump could use the new law to put pressure on India to give in to his demands in the trade deal that both sides are currently negotiating. India will look to further diversify its energy sources, they said.

The analysts don't expect the US to slap heavy tariffs on China, as Beijing has leverage over Washington in critical mineral supplies, among other things.

Commerce and industry minister Piyush Goyal will travel to the US later this month to attend the G20 trade ministerial in Milwaukee, where he may meet US Trade Representative Jamieson Greer, commerce secretary Rajesh Agarwal had said this week.

The latest US move, aimed at forcing out Russian supplies from the global market, could disrupt the oil market and further push up global prices, inflating costs for net importers and developing countries such as India, analysts said. This could potentially stoke inflationary pressure and balance of payment issues in these countries, even as India is on a relatively strong footing.

Currently, India's exports to the US face different duty rates—about 55%, including engineering goods, are subject to the usual most-favoured nation (MFN) duties and a punitive tariff of 10% for alleged use of forced labour. Another 35-40% of goods—such as smartphones, pharmaceuticals and certain farm products—are exempted from the levy, while exports of steel and aluminium face a 50% tariff.

In the financial year 2026, India had exported goods worth $87 billion to the US, its biggest market.

An Indian commerce ministry spokesperson declined to comment on the matter. Queries emailed to the offices of the US Trade Representative, US commerce secretary and the American Embassy in New Delhi on Thursday afternoon were not immediately answered.

Russia has emerged as a key oil supplier to India over the past four years after Moscow started offering discounts, making its oil not just viable but also attractive for Indian refiners, after accounting for logistics costs. However, the discounts have now drastically narrowed.

India's total crude oil imports account for a quarter of its import bill. Its crude import bill for April-July jumped to $63.37 billion, up 56% from a year earlier.

Economic impact

Biswajit Dhar, economist and former professor at Jawaharlal Nehru University, said the US move could have significant economic impact for oil importing nations. "The US action is set to push up inflation and exert further pressure on the balance of payments in net oil importing countries," he said.

Estimates by Bank of Baroda show that a persistent $1 rise in crude prices can raise the country’s annual import bill by around ₹18,000 crore.

Dhar said it would be even harder for New Delhi to negotiate the trade deal with the US now, given that Trump would most likely use his new-found leverage.

Inflationary pressure has been building in India due to the volatility in the energy market since the start of the West Asia war on 28 February. In August, India's retail inflation rose to a 20-month high of 4.82%, driven by higher fuel and food prices, exceeding the central bank's medium-term target of 4% for a third consecutive month. Wholesale inflation, too, inched up to 9.92% in August from 9.78% in July.

India's current account deficit, while still within the comfort zone, rose to 0.5% of GDP in the June quarter from 0.4% a year earlier.

The new law will give Trump sweeping powers on tariffs: he can go up to 100% and also refrain from levying any duty if he so wishes, experts said.

"US Congress approval places such tariffs on stronger legal ground than earlier measures imposed mainly through presidential powers," said Ajay Srivastava, founder of Global Trade Research Initiative. "After the Act is signed, the US Trade Representative will identify the targeted countries and recommend tariff rates. These countries would normally have 180 days to reduce Russian energy imports or negotiate with Washington. However, the president can shorten this period," he added.

"With the passage of this bill in the US, even if India cuts Russian oil imports, it would not help India. The high US tariffs would continue. In order to avoid these tariffs, India will have to completely stop sourcing energy from Russia and that would be very detrimental for our energy security," said Kirit Parikh, former member (energy) of the erstwhile Planning Commission. "I feel India should not buckle down under US pressure and continue to source oil from all available sources, including Russia."

Jayant Dasgupta, former Indian Ambassador to the World Trade Organization, said he expected the US to go soft on China. "India, meanwhile, may be forced to buy more energy products from the US," he said.

About the Author

Rituraj Baruah is a special correspondent covering energy, housing, urban affairs, heavy industries and small businesses at Mint. He has reported on diverse sectors over the last eight years including, commodities and stocks market, insolvency and real estate; with previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.