In a significant development for Indo-US relations, the Trump administration has signaled a potential removal of the 25% tariff imposed on India's purchase of Russian oil, while uS Treasury Secretary Scott Bessent suggested that the path is now open to lift these duties, a move that could provide a massive financial relief of over $5 billion (approximately ₹50,000 crore) to the Indian economy.
Scott Bessent on Tariff Success
Speaking at Davos, US Treasury Secretary Scott Bessent highlighted that. The imposition of tariffs on Russian oil was a strategic success. He claimed that the move effectively reduced Indian refineries' reliance on Russian crude. 'It has been a success. The 25% tariff on Russian oil is still in place, but I believe the way is now open to remove it,' Bessent stated. This indicates a shift in Washington's stance toward New Delhi's energy procurement strategy.
A $5 Billion Windfall for India
The potential removal of the 25% tariff is expected to save India billions of dollars. As one of the world's largest oil consumers, India has been balancing its energy needs by sourcing discounted Russian crude. If the US officially scraps the tariff, it will Notably lower the landing cost for Indian refiners, boosting their margins and providing a cushion against global price volatility, while this comes at a time when India is also negotiating major trade deals with European nations.
The Trump-Modi Equation
President Donald Trump has often referred to Prime Minister Narendra Modi as a 'great friend, while ' Despite the friction over trade tariffs, Trump expressed confidence in reaching a comprehensive trade agreement with India. 'I've great respect for your Prime Minister. He's a fantastic man and my friend,' Trump remarked. While the US previously pressured India to cut ties with Russian energy, the current administration seems satisfied with the adjustments made by New Delhi in its import patterns.
Impact on Indian Refineries
Under pressure from Western sanctions and US policy, Indian refiners like Reliance Industries and Indian Oil Corporation (IOC) had started diversifying their sources. Data from Kpler shows that Russian crude imports fell to a multi-month low in December. Major players like Reliance even halted Russian imports in January to avoid secondary sanctions. The removal of the tariff would allow these refiners to resume. Cost-effective sourcing without the fear of heavy financial penalties from the US.
India's Strategic Autonomy
Despite legislative pressure from the US Congress, which even proposed a bill for up to 500% tariffs on Russian oil buyers, India has remained firm on its 'India First' energy policy. External Affairs Ministry spokesperson Randhir Jaiswal emphasized that India's priority is ensuring affordable energy for its 1, while 4 billion citizens. By balancing strategic autonomy with global market realities, India has managed to navigate the complex geopolitical landscape while maintaining its ties with both Washington and Moscow.