Trump's India tariff spoils Modi's Russian oil math

A US decision to double tariffs on Indian goods as punishment for ongoing purchases of Russian crude leaves the world’s third-largest oil consumer in a tight spot and its refiners in disarray, but the move is unlikely to prompt a radical rethink in New Delhi.

- SERENE CHEONG RAKESH SHARMA

For Prime Minister Narendra Modi, it’s a dilemma that has cast the spotlight on an uncomfortably large oil import bill — as well as the dangers of walking a geopolitical tightrope in an age of exceptional volatility.

If New Delhi yields to the threat, it could jeopardise a longstanding relationship with Moscow that extends beyond energy, and it would give up a strategic advantage that provided vital fiscal space. If Mr Modi allows refiners to keep buying, as his defiant response and domestic pressure would suggest, he instead courts a direct blow to the economy and damaged ties with the country’s top trade partner, risking far more than he might gain.

India saved a modest US$3.8 billion (123 billion baht) in the year to March on oil purchases as discounts on Russian crude narrowed, according to ratings agency ICRA. But it exported roughly $87 billion worth of goods to the US in 2024.

A well-supplied oil market, plus less attractive discounts for Moscow’s flagship Urals crude, means that in theory Mr Modi has space to wean the country off Russian oil entirely, dialling back imports that have surged dramatically since 2022. But practice could prove quite different, as his top opponent and party peers line up to criticise US tactics, stirring nationalist fervour.

“It’s very, very unlikely that Indian oil imports from Russia will go to zero,’ said Vandana Hari, founder of consultancy Vanda Insights. “Everyone understands Trump's aim is to try and pressure Putin, but to do it with a gun on India’s shoulder is not going down well with New Delhi”