India's $40 bn oil bet faces Trump's 100% tariff risk

India's $40.8 billion purchase of crude oil from Russia in FY2026 represents nearly a third of the country's total crude imports, according to the Global Trade Research Initiative (GTRI). This substantial reliance on Russian oil puts India at the center of a potential US sanctions push, which could lead to additional tariffs of up to 100% on major purchasers of Russian energy.

President Donald Trump has the authority to impose such tariffs if India continues to buy Russian energy after the Sanctioning Russia and Iran Act is passed by the US House of Representatives on September 16.

The shift in India's dependence on Russian crude has deepened since FY2026, with Russia supplying 51% of India's imported crude oil by July 2026. This growing dependence on Russian oil comes with significant implications for India, as it helps lower the import bill, improve energy security, and contain inflation. However, a 100% tariff imposed by the US could have far-reaching consequences, potentially affecting thousands of Indian products exported to the US.

At the same time, India is negotiating a bilateral trade agreement with the US, which is nearly finalized. Commerce Secretary Rajesh Agrawal mentioned that the agreement is "more or less finalised" and that the two countries are working on a framework for preferential market access. The potential Russian oil tariff threat could put additional pressure on India as it navigates these negotiations, as Washington might use the threat of tariffs to push New Delhi towards accepting terms in the bilateral trade agreement that India may otherwise consider unfavorable.

Critics argue that the proposed tariffs are an attempt to pressure India into signing the agreement on unfavorable terms, while supporters claim that targeting countries purchasing Russian energy would reduce the revenues available to Moscow for its war. Nevertheless, India's continued dependence on Russian oil and its stake in the upcoming trade agreement make it a key player in this geopolitical chess match.