US tariff clouds loom again: India awaiting more clarity on Russia sanctions bill

Its wait and watch for India right now with the US passing a Bill that would enable levy of upto 100% tariff on countries that purchase Russian crude oil. According to sources, the government is monitoring the development but will have to see the impact of the legislation and exact tariff once US President Donald Trump signs it and it is implemented.

While India has diversified its energy supplies over the last year and increased purchase from the US, sources have time and again underlined that these decisions are based on national interest.

“As stated on several earlier occasions, India remains firmly committed to ensuring energy security for its 1.4 billion people. It will continue to do so through diversified sourcing and on the basis of evolving market dynamics,” the Ministry of External Affairs said in a statement on September 17 on the passage of the Sanctioning Russia and Iran Act in the US Congress.

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The impact on India’s exports as well as the ongoing trade negotiations with the US will also have to be seen.

Till now, India and US have been confident of reaching a consensus on the proposed first tranche of the bilateral trade agreement despite the US initiating investigations against several countries including India on charges of forced labour and excess capacity. India has also been slapped with a 10% tariff in July this year on charges of forced labour for imports.

While this has so far been absorbed, higher tariffs of up to 100% could lead to much bigger impact on exports, which have already been facing headwinds due to the West Asia war.

The US remains India’s largest export destination. India’s shipments to the US in August rose 21.83% to $8.4 billion while imports increased by 65.78% to $5.97 billion.

The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, which was passed by the US House of Representatives on September 16 allows the US president to impose additional tariffs of up to 100% on goods from the five largest buyers of Russian crude oil and natural gas.

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Madhavi Arora, Chief Economist, Emkay Global Financial Services noted that this development increases tariff uncertainty, and risks derailing the recovery in India’s exports to the US since the IEEPA tariffs were struck down in February 2026.

India’s average monthly exports to the US had dropped to $6.5 billion during September 2025 to February 2026 when India faced 50% tariffs, versus $8.1 billion in the preceding six months. This has now risen to $8.5 billion (from March 2026 to August 2026) with the tariff rate having dropped to 10% (and largely in-line with peers); a significantly higher tariff being imposed under this bill would again likely see India’s exports to the US falling materially, she said.

Aditi Nayar, Chief Economist, ICRA Ltd also said that any imposition of higher tariffs by the US, and the associated uncertainty, would cast a downside on Indian growth prospects.

A report by the Global Trade Research Initiative (GTRI) highlighted that the threat from the legislation is serious because India imports more than 88% of its crude-oil requirements. In July 2026, Russia supplied India with crude worth $7.27 billion — 51.1% of its total crude imports of $14.21 billion. Other suppliers were far behind. The UAE accounted for 10.8% of India’s July imports, Saudi Arabia 9.6%, Venezuela 6.3%, Brazil 5.5%, Oman 5.3% and the US 2.9%.

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The report noted that Washington will now threaten tariffs of up to 100% and then offer a lower rate if New Delhi cuts Russian oil purchases and accepts concessions under a deeply unequal bilateral trade agreement. “India should not trade away its energy security for temporary tariff relief,” it advocated pointing out that the US can continue with further action even if India agrees to its terms.

Washington has imposed new tariffs even after signing trade agreements with major partners such as the EU, Japan and South Korea, using Section 301 investigations, sectoral measures and other trade laws, it noted.