India Faces US Tariff Threats Over Record Russian Oil Imports

The Government of India is navigating a complex energy crisis as the United States proposes punitive tariffs of up to 100 percent on countries purchasing Russian crude oil. This trade pressure arrives as Russian oil reached a record 50.83% share of India's total imports in July 2026, totaling 2.47 million barrels per day. To maintain these flows and bypass G7 price caps, India has shifted settlements toward Chinese yuan, UAE dirhams, and Russian rubles.

Economists warn that reducing these imports to appease Washington would cause significant domestic instability. Santosh Mehrotra noted that a 50 percent reduction in Russian oil could increase India's annual import bill by USD 5-10 billion and raise inflation by 0.3 percentage points, while also pressuring the current account deficit and the rupee. Other experts suggest India should diversify its markets rather than succumb to US pressure, arguing that energy and food security must remain top priorities.

Simultaneously, the trade relationship has evolved into a two-way street. Due to Ukrainian attacks on Russian refineries, Russia has begun importing refined gasoline from India to address domestic shortages. Nayara Energy delivered the first such cargo on August 5, 2026. This reversal helps India bridge a massive trade deficit with Moscow, which currently stands at approximately USD 63.5 billion in imports against only USD 4.5 to 5 billion in exports.