India warns new US tariffs over Russian oil could hit ties, vows to protect energy security

India has warned Washington that new measures to levy tariffs over the purchase of Russian oil could impact bilateral ties, the South Asian nation's foreign ministry said today (17 September), hours after the US made a new move to punish such buyers.

Earlier in the day, the US House of Representatives passed a sweeping sanctions and tariff bill intended to increase economic pressure on Russia over its invasion of Ukraine.

The bill, now sent to President Donald Trump to sign into law, authorises him to impose stiff tariffs of up to 100% on China, India and other countries to reduce their dependence on Russian energy.

The Indian foreign ministry said that it had noted the passage of the bill, adding that New Delhi had raised the issue with various US interlocutors in recent months, and had "very clearly articulated" the potential implications for the bilateral relationship and the international energy market.

New Delhi remains "firmly committed" to ensuring energy security for its people and will continue to source supplies from diverse sellers based on market dynamics, the ministry said in a statement.

"The Indian side has also made clear its determination to take all necessary measures to protect its trade and economic interests," said the ministry, adding that the government would work closely with trade and industry bodies to deal with the implications of the legislation.

India, the world's third-biggest oil importer, is among the biggest buyers of Russian oil, which is seen as helping Moscow replenish its budget since it launched its full-scale invasion of Ukraine in 2022 and was hit with sweeping Western sanctions.

New Delhi has repeatedly sought to resist pressure to scale back its oil trade with Russia, saying its large population and economy need secure, affordable and reliable energy supplies.

Indian refiners have arranged oil for September and October which includes Russian oil, according to sources aware of the matter.

Two refining sources said they want the government to take up the issue with US authorities as oil prices will rise sharply if Trump decides to impose new tariffs.

Oil supplies have reduced substantially due to the war in the Middle East and cutting Russian supplies will have a big impact on the profits of refiners as they are already selling fuels at below-market costs, the sources said.

Refiners want the government to seek some relaxation, instead of imposing a 100% tariff, to allow them to wind down the existing transactions and fix a quota for India to buy Russian oil, they added.

Complicating trade talks

Indian analysts say the possibility of new US tariffs on Indian exports could complicate ongoing India-US trade negotiations and potentially delay or make an agreement on a trade pact more difficult.

"Washington may use the tariff threat to pressure India to reduce Russian oil purchases and accept a deeply unequal trade agreement," said Ajay Srivastava, founder of New Delhi-based think-tank Global Trade Research Initiative and a former trade official.

After months of talks, India and the US are yet to reach a consensus on a trade agreement, with New Delhi holding out for a better deal.

Indian Trade Minister Piyush Goyal will travel to the United States for the G20 trade ministers' meeting later this month, where he is expected to hold a bilateral meeting with the United States Trade Representative Jamieson Greer and discuss the path forward for the deal.