India has significantly benefited from discounted Russian oil imports following the Ukraine conflict, saving an estimated $17 billion since early 2022. However, newly imposed U.S. tariffs—ranging up to 50%—threaten to negate those gains. These punitive measures, enacted under President Donald Trump, could reduce Indian exports by more than 40% (or nearly $37 billion) in the current fiscal year, according to the Global Trade Research Initiative (GTRI). The hardest-hit sectors are expected to be labour-intensive industries such as textiles, gems, and jewellery, putting thousands of jobs at risk.
The economic fallout comes at a politically sensitive time for Prime Minister Narendra Modi and could strain India’s trade relationships. India now faces the complex task of balancing its long-standing strategic partnership with Russia—vital for defence supplies, cheap energy, and geopolitical support—with its increasingly critical ties to the United States. Washington views India as a cornerstone in its Indo-Pacific strategy to counter China’s influence, making the relationship strategically essential despite growing economic friction.
Analysts suggest that India cannot afford to decisively side with either power. As Happymon Jacob, founder of the Council for Strategic and Defence Research, notes, Russia remains an indispensable partner for defence and political backing, while the U.S. is India’s most important strategic ally. Navigating this geopolitical tightrope will demand diplomatic finesse, as India seeks to maintain its global standing without jeopardising critical economic and security interests.
