India Weighs US Exemption, Energy Diversification Amid Tariff Threat

What changed

A US law signed by President Donald Trump could impose secondary sanctions of up to 100% tariffs on countries trading with Russia and Iran. That puts India’s Russian crude imports at the centre of a new pressure campaign: India imports more than 80% of its crude, and nearly half currently comes from Russia.

The proposed response has three parts: seek a US exemption, diversify energy sources, and coordinate resistance with other affected countries.

Why it matters

India buys roughly 5 million barrels of crude oil a day. Russian Urals have helped anchor its energy security for the past two years through discounted supplies, so disrupting that flow could push up the cost of keeping factories, transport and households running.

Replacing Russian crude would also be difficult at a moment when alternative maritime routes through the Persian Gulf are described as increasingly constrained by regional conflict. India therefore faces a narrow choice: accommodate Washington and risk a more expensive energy system, or resist and expose its wider trade relationship with the United States to a potentially ruinous tariff fight.

The most practical near-term move is an exemption request built around US interests, especially the domestic political pressures facing Trump before November. That is a tactical calculation, not a settlement. India would still need to reduce its dependence on any single supplier while trying to coordinate with other countries that could face the same sanctions threat.

The central uncertainty is whether the sanctions will take effect in this form, what their final legal reach will be, and whether Washington will grant India an exemption. Until those questions are answered, the threat is less a settled trade penalty than a lever over India’s energy choices.