India Warns US Tariffs Over Russian Oil Could Strain Bilateral Ties

India has cautioned the United States that new measures to impose tariffs on buyers of Russian oil could damage bilateral relations, the foreign ministry said on Thursday, shortly after the US House of Representatives passed a sanctions and tariff bill aimed at increasing economic pressure on Russia over its invasion of Ukraine.

The legislation, now sent to President Donald Trump for signature, would authorize tariffs of up to 100% on countries including China and India to reduce their reliance on Russian energy. New Delhi said it had noted the bill's passage and had raised its concerns with US interlocutors in recent months, clearly outlining the potential consequences for the bilateral relationship and the global energy market.

The foreign ministry stated that India remains firmly committed to ensuring energy security for its people and will continue to source supplies from diverse sellers based on market dynamics. It also made clear its determination to take all necessary measures to protect its trade and economic interests, and said the government would work closely with trade and industry bodies to address the implications of the legislation.

India, the world's third-largest oil importer, is among the biggest buyers of Russian crude, which has helped Moscow replenish its budget since the 2022 invasion and subsequent Western sanctions. New Delhi has consistently resisted pressure to scale back its oil trade with Russia, arguing that its large population and economy require secure, affordable and reliable energy supplies.

Indian refiners have already arranged oil supplies for September and October, including Russian oil, according to sources aware of the matter. Two refining sources said they want the government to raise the issue with US authorities, warning that oil prices will rise sharply if Trump decides to impose the new tariffs. They noted that supplies have already reduced substantially due to the war in the Middle East, and cutting Russian supplies would significantly impact refiners' profits as they are already selling fuels at below-market costs. The refiners are seeking some relaxation instead of a 100% tariff, to allow them to wind down existing transactions and fix a quota for India to buy Russian oil.

Analysts in India say the possibility of new US tariffs on Indian exports could complicate ongoing India-US trade negotiations and potentially delay or make an agreement more difficult. "Washington may use the tariff threat to pressure India to reduce Russian oil purchases and accept a deeply unequal trade agreement," said Ajay Srivastava, founder of the New Delhi-based think-tank Global Trade Research Initiative and a former trade official. After months of talks, the two countries have yet to reach a consensus on a trade agreement, with New Delhi holding out for a better deal.

Indian Trade Minister Piyush Goyal will travel to the United States for the G20 trade ministers' meeting later this month, where he is expected to hold a bilateral meeting with US Trade Representative Jamieson Greer and discuss the path forward for the deal.