500% Tariffs On India Soon? Will Buying Russian Oil Get Costly For Indian Economy? All Eyes On Trump

The tensions between the US and India on an economical scale get grimmer as President Donald Trump has 'greenlit' the bipartisan Russia Sanctions Bill, which could impose humongous tariffs on Russia and its allies. The question is whether India will face the brunt of this bipartisan bill as well, because the 4th largest economy has been among the top buyers of Russian oil. Other countries like China and Brazil are expected to meet the same fate.

Since coming to power, Trump has expressed his displeasure with India for continuing to buy Russian oil even after the US imposed hefty sanctions following the Kremlin's invasion of Ukraine.

500% Tariff Likely On India?

United States Senator Lindsey Graham confirmed that after a very productive meeting with President Trump on a variety of issues, he greenlit the bipartisan Russia sanctions bill. Graham has been working on this bill for months with Senator Blumenthal and many others.

"This will be well-timed, as Ukraine is making concessions for peace and Putin is all talk, continuing to kill the innocent," Graham said on X.

Furthermore, he added the bill will allow President Trump to punish those countries who buy cheap Russian oil fueling Putin's war machine.

He also said, "This bill would give President Trump tremendous leverage against countries like China, India and Brazil to incentivize them to stop buying the cheap Russian oil that provides the financing for Putin's bloodbath against Ukraine."

Graham said a vote will likely take place on the bill by as early as next week. Also, Graham is looking forward to bag a government funding package next week for the bill.

At present, the Graham-Blumenthal sanctions bill is pending to be passed by the US House. The Senate recess is timed to the Martin Luther King Jr Day in the following week.

As per reports, if the bill passed, it will open the gates for US President to slap up to as high as 500% tariffs on countries that knowingly buy Russian oil or uranium, which in result is fueling Kremlin's war against Ukraine. Trump has been negotiating with both Russian President Vladimir Putin and Ukraine President Volodymyr Zelenskyy to end the war.

While Zelensky has admitted to some concessions to end the war, Putin has resisted any resolution.

Has India Stopped Buying Russian Oil?

Trump has taken a jive at India over its allegiance with Russia for oil.

Earlier this week, Trump said, "I have a very good relationship with PM Modi, but he is not happy with me as India is paying high tariffs. But now they have reduced it very substantially, buying oil from Russia."

Trump's remark came after he threatened to hike raise tariffs furthermore if India does not addresses US concerns regarding Russian oil imports. Trump has already raised tariffs on India by additional 50%.

Recently, Trump said, "They wanted to make me happy, basically. Modi is a very good man; he is a good guy. He knew I was not happy, and it was important to make me happy."

However, India has denied that Trump's claim that Prime Minister Narendra Modi has agreed to stop buying Russian Oil. In stead, no such discussion or commitment has been made.

Will Buying Russian Oil Cost India's Economy?

Russia has been India's ally for decades now since the Soviet era. Over the years, the bilateral trade between India and Russia increased to $68.7 billion in the Financial Year 2024-25 from $1.4 billion in 1995.

A latest data from European think tank, Centre for Research on Energy and Clean Air (CREA), revealed that India is the second largest buyer of Russian oil. Since the start of Ukraine war, India has purchased 143.88 billion euros' worth of crude oil from Russia.

Apart from oil, India purchased Euro 162.5 billion worth of fossil fuels, and Euro 18.18 billion worth of coal from Russia since the war.

Meanwhile, China purchased Euro 210.3 billion worth of Russian oil since February 2022.

When Russia invaded Ukraine in late-February 2022, many countries like the US, the UK, Canada, Japan, Italy, France and Germany imposed sanctions on Russia and Putin. The leading countries have imposed various measures to control export from Russia. But countries like China, India, Iran, the United Arab Emirates, Israel and Saudi Arabia have refused to impose any sanctions on Russia.

In December month, during EAM's August 2025 visit, India and Russia pushed to accelerate progress toward the USD 100 billion bilateral trade target by 2030.

While expectations of 500% tariff could have a significant impact on India, and everyone look out for negotiations in trade tariffs.

Has Trump's Tariffs Been Lethal So Far?

According to SBI Capitals EcoCapsule report, the aftermath of the announcement of tariffs by the US was the expectation of a collapse in global trade. These shockwaves led to sharp downward revisions to global growth estimates by mid-CY25. However, in a matter of months, expectations were corrected, and a 3.2% y/y real output growth is projected for CY25 - temperate but tolerable. Fair growth in US, China, and India offset weakness in select countries in Europe.

Economists at SBICaps said, backing this change was the understanding that tariffs are as much to be seen as bargaining chips for trade deals as modes of revenue. This led to many countries chalking out agreements with the US and has meant that the trade balance of major countries is yet to go off-kilter. CY26 will remain volatile as may be exemplified by actions in Venezuela in the first week itself, though uncertainty is off highs seen in the past few years.

Currently, NSO has released its first estimate of FY26 GDP growth at 7.4% (vs the RBI's and Emkay's: 7.3%) implies that growth will moderate to 6.9% in 2HFY26 (vs 8% in 1H).

Analysts at Emkay Global said, "We believe FY27 would see the fading of one-off deflator-led statistical effects that distorted FY26 numbers. This, along with other macro factors, would take real GDP growth toward ~6.5% in FY27E, while lifting nominal growth back to ~10%."