India-US Trade Talks: Russian Oil Tariff Threat Adds Fresh Hurdle, But Deal Remains On Track

India-US trade talks remain active despite a proposed US Senate Bill that could impose tariffs of up to 100 per cent on buyers of Russian oil.

New Delhi says discussions with Washington remain reassuring, even as Russian crude accounts for a significant share of India's oil imports.

Source : ABPLIVE AI

Show Quick Read

Key points generated by AI, verified by newsroom

• US Senate Bill proposes 100% tariffs on Russian oil buyers.
• India's trade talks with US continue amidst tariff concerns.
• India's Russian oil imports have significantly increased recently.

India's trade negotiations with the United States are facing another layer of uncertainty after a bipartisan US Senate Bill proposed tariffs of up to 100 per cent on countries buying Russian energy. Yet, even as the proposed measure raises concerns in New Delhi, the Indian government has indicated that talks with Washington remain active and that both sides continue to work towards a trade agreement.

The latest development comes at a sensitive stage for India, which is simultaneously dealing with existing US tariffs, an ongoing investigation into its manufacturing policies and the question of how its purchases of Russian crude could affect access to the American market.

For now, however, the government is stressing engagement rather than confrontation.

“We are engaging with the US regularly,” reported Business Standard citing a government official, describing the discussions as “reassuring”.

Predictability Is Now A Key Objective For India

Commerce Secretary Rajesh Agrawal has said that India and the US remain in regular contact and are committed to the understanding reached in February, even though the terms of the proposed trade deal are now being revisited.

The two countries had issued a joint statement in February outlining an initially agreed trade framework. Its terms subsequently came under revision after the US Supreme Court scrapped the reciprocal tariffs imposed by US President Donald Trump.

Agrawal said the eventual agreement should provide greater certainty for businesses on future tariff conditions.

“My sense is, in every deal, one of the key outcomes is predictability in trade relations. I think that endeavour will remain here as well,” he said.

That objective has gained importance as the US considers fresh tariff measures linked to India's Russian oil purchases.

Why The Russian Oil Bill Matters To India

India's dependence on Russian crude has increased significantly in recent months.

According to data cited by the Global Trade Research Initiative (GTRI), Russian oil accounted for an estimated 52 per cent of India's crude imports in July, compared with 48.6 per cent in June.

India's imports from Russia also rose to $8.91 billion in July, nearly twice the $4.84 billion recorded a year earlier.

The Financial Express reported an even higher share based on crude shipment data, with Russian oil purchases reaching 2.78 million barrels per day in July, or 55.3 per cent of India's total crude purchases of 5.03 million barrels per day through July 29.

The numbers explain why the proposed US legislation has become an important issue in the ongoing trade discussions.

100% Tariff Is Proposed, Not Yet In Force

The Senate measure does not immediately impose a 100 per cent tariff on Indian goods.

The US Senate passed the bipartisan Sanctioning Russia and Iran Act of 2026 on August 7, which would empower the US President to impose tariffs of up to 100 per cent on countries purchasing Russian crude. The legislation still needs to go through the US legislative process before it can become law.

The Bill also contains a provision allowing the US President to waive the proposed sanctions if he determines that doing so is in the US national interest.

Citing an Indian government official, FE described the legislation as an internal US process and said New Delhi would continue engaging with American authorities while working towards an early conclusion of the Bilateral Trade Agreement.

Existing US Tariffs Are Already Part Of The Negotiations

The Russian-oil proposal comes on top of existing tariff-related issues between the two countries.

Indian goods currently face an additional 10 per cent tariff under Section 301 of the US Trade Act of 1974.

Separately, the US is conducting another Section 301 investigation into India's policies relating to excess manufacturing capacity. The Office of the United States Trade Representative (USTR) has not yet released the draft findings of that investigation.

India has already participated in the process and submitted its response, Agrawal said. Once the draft findings are released, New Delhi will have another opportunity to make its submissions before the final findings are issued.

The existing additional tariff followed a US investigation into laws in 60 major trading partners that enable imports of goods made using forced labour and potentially affect US businesses.

Delhi Wants The Trade Dialogue To Continue

Despite the additional pressure created by the Russian-oil legislation, India has not indicated that it intends to step away from negotiations.

Agrawal declined to comment directly on the proposed US Bill, saying it was part of Washington's legislative process.

“I think the Russia oil tariff Bill is a legislative process in the US that is underway. I don’t think I should comment on that. It’s their internal process,” he said.

He added that India remains engaged with the US on the trade agreement and that both countries continue to maintain regular contact.