August 1, 2025

India’s trade relations with Russia have come under the spotlight following US President Donald Trump’s announcement of a 25% tariff on Indian exports, effective from August 1, 2025. This decision is attributed to India’s high tariffs on American goods and what Trump describes as ‘obnoxious’ non-monetary trade barriers. However, the underlying issue extends beyond trade disputes; Trump’s tariffs serve as a strategic shake-up in response to India's growing ties with Russia, especially in sectors like oil and military imports. Trump has threatened what he calls an ‘additional penalty’ for India’s strategic partnerships with Moscow, marking a departure from conventional sanctions by introducing what he brands as ‘secondary tariffs.’ This new tariff list encompasses a wide array of products, ranging from electronics to seafood, effectively jeopardizing India's strong export presence in the US market. Despite Trump's aggressive rhetoric, India and Russia maintain robust relationships that stretch back to the 1950s, characterized by consistent diplomatic support and thriving trade ties. As reported, bilateral trade reached $68.7 billion in the fiscal year 2025, significantly higher than pre-pandemic levels. Notably, oil imports from Russia now account for a staggering 40% of India’s total oil imports, a significant rise from before the Ukraine crisis. Additionally, recent agreements, including a vast energy deal between Indian conglomerate Reliance and Russia, showcase the depth of this relationship. However, state-run refiners in India have reportedly paused new Russian oil purchases, attributing this shift to narrowing discounts and pressure from the US government against purchasing from Moscow. This development adds complexity to an already intertwined relationship. India is also a leading global importer of Russian arms, with over half of its military equipment sourced from Russia. While New Delhi aims to diversify its defense portfolio, the depths of its dependence on Russian military equipment cannot be overlooked. The bilateral connections are further solidified through joint nuclear projects. Prime Minister Narendra Modi’s frequent engagements with President Vladimir Putin indicate a commitment to maintaining this relationship. In response to rising US pressure, Indian officials, including High Commissioner Vikram Doraiswami, assert that India will not compromise its economy for Western sanctions, emphasizing the importance of energy security and defense needs. Amidst this, India has faced criticism from the West for its neutral stance on the Russia-Ukraine war, raising concerns about its role in supplying technologies to Russia. As the largest exporter to the US, accounting for nearly 25% of its total exports, India faces significant economic ramifications from these tariffs. The tariffs pose a risk of making India a less competitive manufacturing hub, threatening to diminish its exports to the US. Moreover, Trump's announcement of a trade deal with Pakistan, which includes developing their oil reserves, adds a layer of complexity to the situation. As tensions mount, a bipartisan US Senate bill proposes steep tariffs on countries, including India and China, maintaining trade with Russia. The bill could place additional burdens on India’s economic relationship with the US, further straining its diplomatic balance between Washington and Moscow. Despite India’s justification for its trade deals with Russia, the evolving geopolitical landscape presents a challenging path ahead. The anticipated stress test for India's foreign policy will reveal how it navigates the growing pressures as it seeks to uphold its strategic interests while balancing relations with global powers.

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Tags: India, Russia, Trade tariffs, Us relations, Oil imports,