By Nathan Abbington
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| Cover Image Attribute: The file photo of Nayara Energy's exhibit at the India Energy Week 2024 |
India’s energy strategy is rooted in pragmatic considerations of cost and stability. As the world’s third-largest oil importer, India has increasingly turned to Russian crude since the onset of the Ukraine conflict in 2022, capitalizing on discounted rates after Western buyers distanced themselves from Moscow. Official data indicates that Russian oil, which accounted for less than 1% of India’s imports before the war, now makes up a significant portion of its energy mix, with refiners processing between 1.7 and 2.0 million barrels daily. This shift has delivered substantial savings, helping to moderate fuel prices and curb inflation in a nation sensitive to economic volatility. A senior government source emphasized the practical constraints, noting, “These are long-term oil contracts. It is not so simple to stop buying overnight.” The reliance on Russian supplies is further entrenched by contracts with major refiners like Reliance Industries and Nayara Energy, which have integrated these imports into their operational frameworks. However, there are potential paths forward that could help India balance its energy security and diplomatic relations.
The economic rationale for India’s stance is compelling. Analysts estimate that an abrupt halt to Russian oil imports could increase India’s annual import bill by $9–11 billion, a burden that would ripple through industries and households, potentially reigniting inflationary pressures. Indian authorities argue that their purchases, made below the G7-EU price cap of $60 per barrel (later adjusted to just above $47 by the EU), align with international norms designed to limit Russia’s profits while ensuring global oil supply stability. By absorbing discounted Russian crude, India contends it has helped prevent global oil prices from surging beyond the March 2022 peak of $137 per barrel, a scenario that could have exacerbated worldwide inflation. Hardeep Singh Puri, India’s energy minister, defended this approach in a July 10 interview, stating, “If people or countries had stopped buying at that stage, the price of oil would have gone up to 130 dollars a barrel. That was a situation in which we were advised, including by our friends in the United States, to please buy Russian oil, but within the price cap.”
Yet, this pragmatic approach has drawn sharp criticism from the United States, particularly under the Trump administration’s renewed focus on pressuring Russia to end its war in Ukraine. Trump’s imposition of a 25% tariff on Indian goods, announced on July 30, 2025, alongside threats of an additional unspecified penalty, reflects a broader strategy to curb financial support for Russia’s war efforts. Trump has publicly expressed frustration, stating on Truth Social, “They have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD!” His deputy chief of staff, Stephen Miller, echoed this sentiment, asserting, “What he (Trump) said very clearly is that it is not acceptable for India to continue financing this war by purchasing the oil from Russia.” Miller’s claim that India is “basically tied with China” as a top buyer of Russian oil reveal the administration’s perception that India’s actions undermine Western sanctions.
The U.S. position is not without precedent. The Biden administration had previously adopted a more permissive stance, with former U.S. deputy national security adviser Daleep Singh stating in March 2022 that “friends don’t set red lines” and that there was “no prohibition at present on energy imports from Russia.” However, the Trump administration’s shift to a more confrontational approach has placed India in a precarious position. Trump’s threat of 100% tariffs on countries continuing to buy Russian oil, unless Russia reaches a peace deal with Ukraine by August 8, 2025, adds urgency to the issue. Some analysts have interpreted this policy shift as a tactic to pressure both Russia and its trading partners, including India, to align with U.S. objectives. Vishnu Varathan of Mizuho Securities described the U.S. threats as a “clear and present danger” to India, noting that New Delhi is likely to remain non-committal while assessing the trade-offs of its “Russia option,” which could include potential economic sanctions or strained diplomatic relations.
India’s response has been to reaffirm its autonomy in energy decisions. Foreign ministry spokesperson Randhir Jaiswal emphasized, “India’s stable and time-tested partnership with Russia should not be viewed through the lens of any single country.” This stance reflects India’s long-standing relationship with Russia, which dates back to the Soviet era and includes significant arms and energy trade. Russia remains India’s top arms supplier, with a 2024 report from the Stockholm International Peace Research Institute noting that India purchased 38% of Russian arms exports between 2020 and 2024. This historical relationship is not just about trade, but also about shared geopolitical interests and a sense of mutual understanding. The historical depth of this partnership, coupled with practical economic benefits, makes an immediate pivot away from Russian oil politically and logistically challenging. Prime Minister Narendra Modi’s visits to Moscow and meetings with Russian President Vladimir Putin highlights the diplomatic continuity India seeks to maintain, even as it balances ties with the West.
The broader geopolitical context complicates India’s position further. The U.S.-India relationship, historically strengthened by shared concerns about China’s regional influence, has been described as “tremendous” by both Trump and Miller. Yet, Trump’s transactional approach to diplomacy, as noted by retired American diplomat Jon Danilowicz, prioritizes short-term U.S. interests, sometimes at the expense of long-standing allies. Trump’s recent overtures to Pakistan, including a trade deal involving oil partnerships, add a layer of regional tension, given the fraught India-Pakistan relationship. Trump’s quip that Pakistan might “be selling oil to India someday” highlights the shifting dynamics, as does his administration’s success in brokering a ceasefire between India and Pakistan earlier in 2025. India’s rejection of Trump’s claim that it halted military actions under U.S. pressure further illustrates the sensitivity of New Delhi’s strategic autonomy.
The economic fallout from U.S. tariffs is another critical concern. The U.S. is India’s 10th largest trading partner, with a 2024 goods trade volume of $129.2 billion and a trade deficit of $45.7 billion. The 25% tariff, combined with the threat of additional penalties, could disrupt this trade relationship, particularly if negotiations fail to yield a resolution by Trump’s August 8 deadline. Indian refiners, already under pressure from EU sanctions and scrutiny, face a potential squeeze that could destabilize India’s energy market. Bloomberg reported that the Indian government has instructed state-owned refiners to prepare contingency plans for a possible disruption in Russian supplies, though no immediate policy changes have been confirmed. This cautious approach reflects India’s recognition of the risks while maintaining its commitment to affordable energy.
Prime Minister Modi’s remarks at a recent rally in Uttar Pradesh encapsulate India’s broader perspective: “The world economy is going through many apprehensions, there is an atmosphere of instability. In such a situation, the countries of the world are focusing on their respective interests. They are focusing on the interests of their respective countries.” This statement affirms India’s determination to prioritize its economic and energy security, even as it navigates external pressures. The government’s insistence that its oil purchases comply with international norms, including the G7-EU price cap, seeks to deflect criticism while reinforcing its role in stabilizing global oil markets.
The situation presents no easy answers. India’s reliance on Russian oil is driven by economic necessity. Still, it risks straining ties with a key partner, the United States, at a time when global alliances are increasingly fluid. The Trump administration’s hardline stance, while aimed at pressuring Russia, may inadvertently push India toward closer alignment with other BRICS nations, such as China and Russia, which could complicate U.S. strategic goals in the region. Conversely, India’s refusal to immediately comply with U.S. demands reflects a calculated effort to preserve its strategic autonomy and protect its citizens from economic hardship.
A middle-ground approach could offer a way forward. India might explore diversifying its oil imports gradually, leveraging relationships with other producers, such as Iran or OPEC+ members, to reduce dependence on Russian crude without triggering immediate economic disruption. Negotiating exemptions or phased compliance with U.S. sanctions could provide breathing room, allowing India to maintain its energy security while addressing U.S. concerns. Simultaneously, the U.S. could adopt a more nuanced approach, recognizing India’s economic constraints and its role in stabilizing global oil prices. Offering incentives, such as trade concessions or energy cooperation, could encourage India to align more closely with Western objectives without resorting to punitive measures. Diplomatic engagement, building on the “tremendous” relationship Modi and Trump have cultivated, could facilitate a compromise that balances India’s national interests with the broader goal of reducing Russia’s war-financing capacity. Such a strategy would require both sides to prioritize long-term partnership over short-term posturing, fostering a resolution that serves mutual interests in a turbulent global landscape.
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