Informist, Wednesday, Aug. 6, 2025

--Govt: US tariff on India for Russia oil unfair, unjustified, unreasonable
--Govt: Will take all necessary actions to protect national interests
--Govt: India's oil imports based on mkt factors, ensuring energy security
--Govt: In recent days US targeted India's oil imports from Russia

NEW DELHI – Within hours of US President Donald Trump announcing an additional 25% tariff on Indian goods to the US for New Delhi's energy procurement from Moscow, the Indian government struck back, calling it "unfair, unjustified and unreasonable." India reiterated its stance that its oil imports were based on market factors and were done with the overall objective of ensuring energy security of the country. "It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest," Randhir Jaiswal, the official spokesperson for the Ministry of External Affairs, said in a statement Wednesday.

Following up on his threats, Trump Wednesday imposed an additional 25% tariff on Indian goods being shipped to the US for procurement of Russian crude oil. "I determine that it is necessary and appropriate to impose an additional ad valorem duty on imports of articles of India, which is directly or indirectly importing Russian Federation oil," Trump said in a White House executive order. On Jul. 30, Trump had announced a 25% tariff on Indian goods shipped to the US, along with an additional unspecified penalty for India's procurement of military equipment and energy from Russia. The 25% tariff is set to kick in from Thursday and, according to the White House order, the additional 25% tariff will be collected from Aug. 27.

Following Trump's threat to "substantially" hike tariff on Indian goods for energy purchases from Russia, the foreign ministry had already given a sharp retort on Monday, hitting back at countries like the US and the European Union for their inconsistent principles. "It is revealing that the very nations criticising India are themselves indulging in trade with Russia. Unlike our case, such trade is not even a vital national compulsion," the foreign ministry statement had said. It had added that the US had actively encouraged India's oil imports from Russia following the Ukraine conflict in order to strengthen global energy market stability. "India will take all necessary actions to protect its national interests," Jaiswal said in Wednesday's statement.

Trump's 25% duty announced last week in itself posed significant risk to India's exports as the US is India's top export destination with a share of nearly 20% in total outbound shipments in value terms. After the ad valorem duty announced Wednesday, it is fair to say the risks have doubled.

India exported goods worth $86.51 billion to the US in 2024-25 (Apr-Mar) and had a trade surplus of $40.82 billion, according to commerce ministry data. According to experts, the 25% tariff announced earlier could itself bring India's total exports below $400 billion in FY26 --the first time in four years--and pose a downside risk of at least 20 basis points to economic growth.

"This move is a severe setback for Indian exports, with nearly 55% of our shipments to the US market directly affected," said S. C. Ralhan, president of the Federation of Indian Export Organisations. "The 50% reciprocal tariff effectively imposes a cost burden, placing our exporters at a 30–35% competitive disadvantage compared to peers from countries with lesser reciprocal tariff." Set up by the commerce ministry, FIEO is a national-level trade promotion organisation.

India has been buying crude oil from Russia at discounted prices amid sanctions by Western countries on Russia after Moscow invaded Ukraine in February 2022. The Group of Seven nations had initially imposed a $60-a-barrel price cap on Russian crude. Later, it imposed more sanctions to try to curb Moscow's petroleum sales. India has bought Russian crude oil up to $30-a-barrel cheaper, though discounts have varied sharply over the past three years and have even been around $4 a barrel in recent times. The International Monetary Fund in February said India saved around $7 billion per year by importing crude oil from Russia at discounted prices.

To be able to escape Trump's tariff tirade, India may have to move away from Russian oil, although that may not be enough since Washington has been pushing countries to commit to buying energy from the US as part of the trade agreements, in addition to making investments there. The European Union committed to purchase $750 billion of US energy products over three years as part of its trade deal with Washington.

New Delhi and Washington have been negotiating a bilateral trade agreement for several months now, with the next round of negotiations scheduled to begin Aug. 25. At the last round in July, the two countries had extended talks but failed to sign a deal, mainly because of differences over market access for agricultural and dairy products. Exporters were hoping the bilateral trade agreement would shield Indian goods from adverse tariff impact, but that seems a distant dream now. End

US$1 = INR 87.73

Reported by Priyasmita Dutta

Edited by Tanima Banerjee

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