New Delhi: India will restrict crude oil purchases from Russia as part of an agreement reached with the US in exchange for lower trade tariffs, sources said, adding imports will continue for now by refiners such as Nayara Energy, which have no other alternative source.
US President Donald Trump announced overnight that the United States will cut the reciprocal tariff on imports of Indian goods to 18 per cent from 25 per cent under a broader bilateral understanding.
According to him, this came after India agreed to stop buying Russian oil, reduce its tariff and non-tariff barriers against the US, and commit to purchasing an additional $500 billion worth of US energy, technology, agricultural products, coal and other goods over time.
The commitment to halt Russian oil purchases removes the additional 25 per cent punitive tariff earlier imposed, effectively lowering the applied US tariff on Indian exports to 18 per cent from 50 per cent, providing substantial relief to Indian exporters.
Indian refiners, which became the world’s second biggest buyer of Russian oil after it became available at a discount post Moscow’s invasion of Ukraine in February 2022, will continue to honour the purchase commitments made prior to the announcement but will not place new orders thereafter, three sources with knowledge of the matter said.
While refiners like Hindustan Petroleum Corporation, Mangalore Refinery and Petrochemicals Ltd and HPCL-Mittal Energy Ltd had stopped buying oil from Russia soon after the US last year slapped sanctions on Moscow’s key exporters, others like Indian Oil Corporation and Bharat Petroleum will wind down their purchases, they said.
Reliance Industries, India’s biggest buyer, which late last year paused purchases after US sanctions on Rosneft and Lukoil, is also likely to cease purchases after its resumption cargo of 100,000-150,000 barrels is delivered.
The only exception to this rule is likely to be Nayara Energy. Nayara was first sanctioned by the European Union and then by the UK for its Russian links (Rosneft holds 49.13 per cent in Nayara). Because of these sanctions, no other major supplier is willing to do any commercial transaction with the company, resulting in it being forced to buy Russian oil from non-sanctioned entities.
Nayara, sources said, is likely to continue purchases of Russian oil from non-sanctioned entities in the near future. The refinery’s unique position was explained to US trade officials during talks in December, they said, adding Nayara may have to be given an exemption from the ‘no-Russian oil-buy’ policy or a special dispensation be created.
President Trump announced that India’s “reciprocal tariffs” will be set at 18 per cent instead of 25 per cent (effective immediately), which is marginally lower than the 19 per cent placed on most ASEAN economies (except Singapore) and 20 per cent on Bangladesh. The extra 25 per cent tariff related to Russian oil will also be removed, as India has reportedly agreed to stop buying Russian oil.
India has also agreed to import $500 billion worth of US goods (energy, agriculture, technology, etc.), over a five-year period.
In 2025, India exported $92 billion worth of goods to the US (20 per cent of total exports) and imported $50 billion worth of US goods (7 per cent of total imports). It imported $180 billion worth of oil, of which about 30-35 per cent came from Russia (against 20-30 per cent from Iraq, 15 per cent from Saudi, 10 per cent from the UAE & 5-10 per cent from the US).