India's Russian oil gains wiped out by Trump's tariffs

India’s multibillion-dollar savings from buying cheap Russian oil are now under threat, as fresh US tariffs on Indian exports came into force on Wednesday, dealing a major blow to New Delhi’s trade earnings.

Since Moscow’s invasion of Ukraine in 2022, India has dramatically ramped up its purchases of Russian crude, taking advantage of heavy discounts and saving an estimated $17 billion in import costs. But those economic gains could vanish quickly after US President Donald Trump ordered punitive tariffs of up to 50% on Indian goods, one of the steepest hikes in decades.
According to the Global Trade Research Initiative (GTRI), the tariffs could slash India’s exports to the U.S. by more than 40%—roughly $37 billion—in the current fiscal year. Sectors such as textiles, gems and jewellery, pharmaceuticals, and engineering goods—among India’s largest job creators—are expected to be hit the hardest, threatening hundreds of thousands of livelihoods.
Economists warn that the impact will not be short-lived. “This isn’t just a temporary disruption; it could force India to rethink its trade strategies and supply chains for years to come,” said one trade analyst in New Delhi. The tariffs are also expected to widen India’s trade deficit, pressure the rupee, and complicate the government’s efforts to maintain growth ahead of state elections.
The development places Prime Minister Narendra Modi in a tight spot. While Russia remains critical for India’s energy security and defense needs, the United States is widely seen as India’s most important long-term strategic partner—especially as Washington positions New Delhi as a counterweight to China in the Indo-Pacific.
“India needs Russia for defence equipment, cheap oil, and political backing on sensitive international issues,” said Happymon Jacob, founder of the Council for Strategic and Defence Research. “But at the same time, despite tensions under Trump, the U.S. continues to be India’s indispensable partner. India simply cannot afford to choose one over the other.”
Indian officials privately acknowledge the risks of overdependence on Russian oil. Two senior government sources told reporters that New Delhi is exploring ways to rebalance energy imports by increasing purchases from the U.S. and Middle East suppliers while avoiding a complete halt to Russian crude.
Diplomatic engagement is already underway. India’s Foreign Secretary confirmed on Tuesday that bilateral talks with Washington are in progress, covering trade frictions, nuclear energy cooperation, and critical minerals exploration. Indian negotiators are also seeking exemptions for certain export categories, hoping to cushion the blow for small and medium enterprises.
Analysts believe the outcome of these talks could redefine India’s external economic strategy. A failure to soften the tariffs may accelerate New Delhi’s shift toward diversifying its export markets, deepening trade with Southeast Asia, Africa, and Latin America. However, repairing ties with Washington is seen as a priority, given the scale of U.S. investments in India’s technology, defense, and clean energy sectors.
For now, India finds itself caught between two powerful partners—Russia, its old ally, and the U.S., its indispensable future ally—while facing one of its biggest trade shocks in decades.