New Delhi faces tough choices as Trump’s trade offensive threatens exports and jobs
India’s strategy of saving billions through discounted Russian oil imports is on the brink of collapse after the United States slapped steep tariffs on Indian goods. The new tariffs, effective Wednesday, could erase the financial advantage India gained from buying cheaper crude since the Ukraine war began.
Analysts estimate India saved $17 billion on Russian oil purchases since early 2022. But President Donald Trump’s decision to impose tariffs of up to 50% on Indian exports could cut outbound trade by 40%—roughly $37 billion—this fiscal year, according to the Global Trade Research Initiative (GTRI).
Ripple Effect: Jobs and Politics at Stake
The impact of the tariffs is expected to be severe, threatening thousands of jobs in labor-heavy sectors such as textiles, gems, and jewelry. Politically, it poses a major challenge for Prime Minister Narendra Modi, who faces critical state elections later this year.
Experts warn that India’s response in the coming weeks could redefine its decades-long relationship with Russia and recalibrate ties with the United States—a partnership Washington sees as central to countering China in the Indo-Pacific.
Between Two Powers
“India needs Russia for defense supplies, discounted oil, and diplomatic support,” said Happymon Jacob, founder of the Council for Strategic and Defence Research. “At the same time, the US remains India’s most critical strategic partner. India simply cannot afford to choose one over the other.”
Two Indian government sources confirmed that New Delhi is seeking to repair ties with Washington and is considering increased purchases of US energy—but is unwilling to fully halt Russian oil imports.
Energy Dilemma
Russian crude now makes up 40% of India’s oil imports, compared to almost zero before the Ukraine war. A sudden halt would be economically unfeasible and risk a global price spike to $200 per barrel, according to internal Indian government estimates. India also benefits from up to 7% discounts on Russian oil compared to global benchmarks.
Reliance Industries, led by billionaire Mukesh Ambani, dominates these imports, refining millions of barrels at its Gujarat facilities.
Diplomatic Tensions and Double Standards
India has strongly criticized Washington for “double standards,” noting that the US continues to import Russian uranium, palladium, and fertilizers even as it targets Indian oil imports. New Delhi argues that its purchases are aimed at securing affordable energy for its population.
US Treasury Secretary Scott Bessent recently accused India of “profiteering” from discounted Russian oil, calling it unacceptable.
Geopolitical Chess
India is ramping up diplomatic outreach to maintain balance. Senior officials have recently visited Moscow, while Modi is scheduled to visit China later this month for a Shanghai Cooperation Organisation summit, where he is expected to meet both Xi Jinping and Vladimir Putin.
Although Russia has pushed for a trilateral summit with China and India, sources say New Delhi remains cautious about deepening ties with Beijing, despite signs of a thaw since their deadly 2020 border clash.
Wider Implications
Experts say Trump’s aggressive trade moves could take US-India relations to their lowest point since the 1998 nuclear sanctions era. Beyond trade, the dispute may affect work visas for Indian tech professionals and outsourcing of IT services.
Even if some tariffs are later rolled back, the damage could linger. “Competitors like China, Vietnam, Mexico, Turkey, and even Pakistan could capture India’s market share,” said Ajay Srivastava, GTRI founder and former Indian trade official.
