US Revokes Tariff on India, Establishes Panel to Monitor Russian Oil Imports
In a significant diplomatic move, US President Donald Trump has officially revoked the 25% additional tariff imposed on India. This decision, announced on Saturday, comes with a critical condition: India must cease all direct and indirect imports of Russian oil. The executive order outlines that a US government panel will be tasked with monitoring India's compliance, and the tariff could be swiftly reimposed if such purchases are found to resume.
Executive Order Details and Monitoring Mechanism
The executive order explicitly states that India has committed to stopping its imports of Russian oil and will instead pivot towards purchasing energy products from the United States. To enforce this commitment, the Secretary of Commerce, in coordination with other senior officials including the Secretary of State and the Secretary of the Treasury, will oversee the monitoring process.
If the panel determines that India has resumed importing Russian oil, the Secretary of State, in consultation with a broad array of advisors, will recommend whether additional actions should be taken. This could include the reimposition of the 25% ad valorem duty on Indian imports, as specified in the order.
India's Dependence on Russian Oil and Current Trends
This development holds immense significance given India's energy landscape. Since FY23, Russia has emerged as India's largest crude oil supplier, primarily due to the discounted prices it offers compared to other major exporters. In FY25, Russian crude accounted for approximately 35% of India's total oil imports, underscoring the depth of this energy relationship.
Although imports from Russia have seen a decline in recent months—attributed to high tariffs and US sanctions on key Russian suppliers like Rosneft and LUKOIL—Russia remains the predominant source of crude oil for Indian refineries. According to data from trade provider Kpler, Russia supplied 1.16 million barrels per day of oil to India as recently as January.
Queries sent to the Indian ministries of petroleum and natural gas and external affairs regarding the US panel's monitoring of oil imports from Russia were not immediately answered on Saturday afternoon, highlighting the sensitive nature of these discussions.
US-India Interim Trade Agreement and Energy Commitments
Parallel to the tariff revocation, the United States and India have agreed on an interim trade agreement framework. A joint statement released early Saturday reveals that India is set to substantially increase its energy imports from the US. This includes coking coal and other energy products, as part of a broader commitment.
India intends to purchase $500 billion worth of products from the US over the next five years, with energy products forming a core component of this ambitious target. While the statement did not provide exhaustive details on the specific energy products, it is understood that India has been actively working to boost imports of crude oil, liquefied natural gas (LNG), and liquefied petroleum gas (LPG) from the world's largest economy in recent years.
Shifts in India's Oil Import Strategy
One of the key elements in India's energy strategy is the increased procurement of crude oil from the United States. Both nations had previously committed to elevating bilateral energy trade to $20 billion last year. In January, India imported around 297,000 barrels per day from the US, a slight increase from 293,000 barrels per day a year earlier, with a peak of 568,000 barrels per day recorded in November.
As India diversifies its oil import sources, US oil is poised to become a major beneficiary. It is projected to account for up to 10% of India's crude intake, largely displacing lighter grades from West Africa rather than directly competing with Russian supply. This strategic shift underscores India's efforts to balance its energy security with geopolitical considerations and trade obligations.
