Why Trump's tariff move isn't likely to shake India's oil ties with Russia

Time of India

3 days ago

Donald Trump has made a lot of noise about India's oil trade with Russia, calling it profiteering and threatening to 'substantially raise' tariffs on Indian goods. But New Delhi isn't blinking.
As reported by TOI, a senior Indian government official put it plainly, 'We will go solely by the interest of our consumers and opt for the best option price-wise. If Russian crude works out cheaper than what we can get from other sources, why should we penalise our consumers?'
The Centre has so far not made any move to wean off Indian oil refiners from Russian crude, which comes at a steep discount compared to purchases from west Asia or US. It has not just helped keep domestic pump prices lower, but also benefited European countries, which have been major buyers of diesel and jet fuel from India, sources told TOI.
The economic logic is straightforward. Russian oil has been cheaper than what's available from West Asia or the US. India's refiners are not just cutting costs—they're helping stabilise fuel prices at home. And here's the kicker: Europe benefits too, as Indian refiners export refined fuels like diesel and jet fuel, some of which reach European markets.
Trump's pressure tactics and the political showmanship
Trump's frustration is spilling over into tariff threats. His core accusation?
'India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits. They don't care how many people in Ukraine are being killed by the
Russian War Machine
.'
He followed that with, 'Because of this, I will be substantially raising the Tariff paid by India to the USA.'
No actual figures were given. But just last week, he'd already slapped a 25 per cent tariff on Indian goods and floated a possible jump to 100 per cent unless India stops buying Russian oil.
Trump's new deadline is August 7. If Russia doesn't agree to a ceasefire in Ukraine, he's hinted at secondary sanctions on countries that continue trading energy with Moscow. That includes India, China, and Brazil.
But these threats are running into hard economic and political realities.
Why Russian oil imports still makes sense for India
After the West sanctioned Moscow in 2022, Russia started offering deep discounts on its oil. That's when India stepped in. It now buys around 1.7 million barrels a day of Russian crude, according to Bloomberg data.
India isn't just stockpiling it. In the first half of this year, it exported 1.4 million barrels a day of refined fuels. About 40 per cent of that was diesel or gasoil, and 30 per cent was petrol and blending components. Refiners blend multiple sources of crude before producing fuels, so it's not always clear which exports came from Russian barrels. But the volume speaks for itself.
And the trade hasn't slowed down. Over the weekend, at least four tankers delivered millions of barrels of Russian crude to Indian ports.
India pushes back: No apologies, no shift in strategy
India's Ministry of External Affairs had a sharp response.
'The targeting of India is unjustified and unreasonable,' it said. 'Like any major economy, India will take all necessary measures to safeguard its national interests and economic security.'
It also pointed out that the US and EU themselves continue to trade with Russia, even when there's no national compulsion.
India's position has been consistent. The decision to buy Russian oil was triggered when traditional suppliers diverted their barrels to Europe. It was the US, in fact, that nudged India to continue those purchases—albeit within the G7's price cap.
Energy Minister
Hardeep Singh Puri
told CNBC in July that the Russian crude trade helped global prices stay in check, saying India was advised by Washington to keep buying—'but within the price cap.'
NSA Doval heads to Moscow
National Security Adviser Ajit Doval is heading to Moscow this week. The visit is expected to offer clarity on how India plans to navigate what officials call a 'geo-economic trilemma': cheap energy, political pressure, and long-term security interests.
India has not made any move to scale back Russian imports. If anything, officials are eyeing additional discounts in light of Trump's bluster.
Even business circles in Delhi are calling out the former US president's rhetoric.
A statement from trade research body GTRI summed it up, 'India's oil trade with Russia has taken place with full transparency and broad understanding with the US… Trump's decision to raise tariffs on India citing oil trade is not only unjustified—it ignores market realities, misrepresents trade data, and undermines a key strategic partnership in the Indo-Pacific.'
The BRICS factor and Dollar alternatives
This isn't just about oil. Trump has also slammed India's involvement in BRICS and the bloc's discussions around alternatives to the US dollar. He's claimed India has the 'most strenuous and obnoxious non-monetary trade barriers' and is using tariffs as leverage to open up Indian markets to US agriculture and dairy—an area where India has refused to budge.
One official noted that despite discussions, India would not allow imports of genetically modified American corn and soybean. Nor would it revise its stand on farm and dairy tariffs, which Trump has repeatedly criticised.
India's energy alternatives, but only if needed
If forced to diversify, India could boost imports from Iraq, Saudi Arabia, the UAE, and the US. In fact, last week saw India's largest refiner suddenly snap up several million barrels from the US and UAE—moves widely interpreted as precautionary, not strategic shifts.
India had, during trade talks, shown interest in ramping up imports of American gas, fertiliser, and defence equipment to improve the trade balance. But there are limits. Modi has refused to open up sensitive sectors like dairy, even as the US pushes hard.
Trump and Modi were once seen as political allies. That relationship has cooled. The current standoff is the latest in a string of Trump-led escalations over oil, trade barriers, and foreign policy. From threatening to block access to US markets over India-Pakistan tensions, to taking credit for peace deals India denies happened, Trump's combative posture has worn thin in Delhi.
His latest push threatening penalties on anyone still paying for Russian oil reflects growing frustration with Putin's unwillingness to compromise. Trump's nuclear submarine move last week, reportedly in response to Dmitry Medvedev's rhetoric, only adds to the volatility.
But India, for now, isn't shifting course. As one Indian official summed it up, 'We are guided by what's best for Indian consumers, not what's best for Washington politics.'
And that might be the line that defines this whole saga.