100% tariff threat over Russian oil could roil India-US ties

New Delhi: India's ties with the US could be adversely impacted if the Trump administration imposes 100% tariffs on countries purchasing Russian crude while simultaneously giving concessions to Europe for importing natural gas from Moscow.

The Modi government has taken strong note of a bill that threatens to impose sweeping sanctions on Russia, while naming India among five countries that could face 100% tariffs for continuing to buy Russian oil, ET has learnt.

"The US is not taking the right approach. These are double standards vis-a-vis Europe and may not achieve the desired result. The move has the potential to damage relations with India even further," a senior source told ET. "Making India a punching bag for US foreign policy failures will be counterproductive," the source said, adding, "China will find a way to continue importing Russian oil notwithstanding any sanctions."


The bill comes at a time when India and the US are working to finalise a trade deal. The US move is not prudent at a time when the Strait of Hormuz crisis has disrupted energy supply chains from the Gulf, and squeezing Russian oil out of the global market could have a negative impact. India's imports of Russian crude rose to a record high in June, increasing 34% from the previous month. Imports of Russian crude by India have increased since the Iran war.

A bipartisan group of US senators has unveiled a long-awaited bill imposing sweeping sanctions on Russia. The legislation, titled the 'Lindsey Graham Russia Accountability Bill', was formally announced on Capitol Hill on Tuesday by senators Richard Blumenthal and Jeanne Shaheen, along with more than a dozen other lawmakers from both parties.

The bill authorises the administration to impose tariffs set at a rate above zero but capped well below the full value on countries identified as the largest buyers of Russian oil. Blumenthal named five countries - China, India, Slovakia, Hungary and Azerbaijan.

A related provision targets buyers of Russian natural gas, but exempts countries importing less than 15% of their gas from Russia if they are already reducing purchases, a carve-out that shields most European allies.