Source: The post India navigates US tariffs and Russian oil pressures pragmatically has been created, based on the article “Russian oil: Sifting politics from economics” published in “Businessline” on 12th August 2025. India navigates US tariffs and Russian oil pressures pragmatically.
UPSC Syllabus Topic: GS Paper 2- Effect of policies and politics of developed and developing countries on India’s interests,
Context: The upcoming August 15 meeting between Russian and US leaders in Alaska could have major implications for the global oil market. India, a top fossil fuel consumer with strong ties to Russia, faces heightened pressure after a US tariff decision linked to its Russian oil imports.
US Tariffs and India’s Position
- Executive Order and Tariff Decision: On August 6, the US announced a 25% tariff on Indian imports, effective August 27, over India’s continued purchase of Russian oil. The order also outlined possible similar measures against other importers.
- Link to Russia-Ukraine Conflict: The tariff was framed as part of addressing the national emergency caused by Russia’s actions in Ukraine. The US linked India’s oil imports directly to this geopolitical issue.
- Criticism of the Move: Experts criticised the tariff as unfair and lacking understanding of global oil market complexities, noting it ignored India’s diverse sourcing strategy.
India’s Oil Import Landscape
- Diverse Supply Sources: India imports oil from 40 countries, including Russia, Iraq, Saudi Arabia, the US, and Nigeria. Purchases are based on economic viability rather than political considerations.
- India’s Share in Russian Exports: From Dec 2022 to July 2025, Russia exported 47% of its crude to China, 38% to India, and 6% each to the EU and Turkey, showing India is not alone in buying Russian oil.
- Separation of Politics and Economics: So far, India has kept political disputes separate from energy trade decisions to safeguard national interests.
Strategic and Policy Options
- LNG Imports from the US: Experts suggested increasing LNG imports from the US, reducing Russian oil purchases to around 20%, and exploring the shorter Alaska route to ease US pressure and advance energy transition goals.
- Building Strategic Petroleum Reserves: Experts stressed expanding SPR capacity. Currently, three reserves provide only 10 days of backup for India’s 5.5 million barrels/day demand. Two more are under construction but will not fully resolve supply risks.
- Long-Term Agreements and Risk Mitigation: Identifying low-risk suppliers and securing long-term deals could reduce last-minute market pressures.
Challenges in Implementation
- Limited Immediate Solutions: Experts observed that practical options are few, apart from diplomatic engagement and maintaining diverse crude sources, making US tariffs especially damaging.
- Dependency on Imports: India imports 88% of its oil needs, making it vulnerable to external shocks despite diversification.
Government’s Energy Strategy
- Multi-Dimensional Approach: The Petroleum Minister outlined strategies including diversifying crude imports, boosting domestic output, developing alternative fuels, expanding refining capacity to 310 MMTPA by 2028, and growing petrochemicals into a $300 billion industry by 2030.
- Balancing Rhetoric and Economics: Long-term success depends on separating political narratives from economic logic while sustaining reforms to navigate global energy volatility.
Question for practice:
Examine the challenges and strategies of India in managing energy security amid US tariffs on its Russian oil imports.
