The US Senate has passed legislation allowing tariffs of up to 100% on major buyers of Russian energy, putting India back in the crosshairs of potential trade restrictions. The bill, negotiated by late Senator Lindsey Graham and passed with an 86 to 11 vote on August 7, seeks to impose penalties on countries buying Russian gas, oil, and other exports that allegedly fund the Ukraine war. The measure identifies China, India, Slovakia, Hungary and Azerbaijan as the five largest buyers of Russian crude oil, with India accounting for approximately 30% of Russia's crude imports in FY26. The legislation allows President Donald Trump to impose additional tariffs ranging from above zero to 100% on countries that continue purchasing energy products from Russia 30 days after the law takes effect. However, the bill does not automatically impose tariffs - it must still pass the US House of Representatives and receive Trump's approval before taking effect. The legislation also allows the president to waive sanctions if he determines it's in the US national interest, providing some flexibility in implementation.
India's position as one of the world's biggest buyers of Russian crude oil places it squarely in the crosshairs of the new US legislation. India's imports of Russian oil have surged dramatically, with Kpler data showing Indian refiners imported a record 2.8 million bpd of Russian crude in July 2026, accounting for about 55.5% of total crude imports of just over 5 million bpd. This represents a significant escalation from the 1.8 million bpd average in 2024, demonstrating the country's continued reliance on discounted Russian supplies. Darline Graham, the late senator's sister who was appointed to his seat, stated that the legislation would force countries supporting Russia's economy to make a choice: "This bill forces those primary countries keeping Russia's economy afloat to make a simple yet critical choice – a choice between doing business with America or buying cheap Russian energy." The shift toward Russian crude has been driven by huge discounts available since the Russia-Ukraine war began in 2022, with Russia becoming available at discounts that helped Indian refiners lower crude costs and secure supplies despite global market disruptions. India's purchases of discounted Russian crude have increased significantly since the war began, with the reliance becoming even more important amid disruptions to shipping through the Strait of Hormuz. New Delhi has repeatedly maintained that its energy purchases are guided by national interest, energy security and the need to ensure affordable and reliable supplies.
The Global Trade Research Initiative (GTRI) has warned that India faces exposure to additional tariffs of up to 100% on its exports if it continues purchasing Russian crude oil. According to GTRI Founder Ajay Srivastava, while China buys more Russian crude than India, India may face greater US pressure due to Washington's previous pattern of penalizing India while sparing China. Russia supplied 30.3% of India's crude imports in FY2026, worth USD 40.8 billion out of a total USD 134.7 billion, helping reduce costs and contain inflation. Srivastava emphasized that "giving it up under pressure would impose real costs on the Indian economy." The GTRI analysis explains that Section 113 directs the US president to impose additional tariffs of up to 100% on goods from countries that continue buying Russian crude oil or natural gas 30 days after the law takes effect and rank among the five largest buyers. These tariffs would be added to existing US duties, including tariffs imposed under Sections 301 and 232, as well as anti-dumping and countervailing duties. However, GTRI clarified that the bill does not automatically trigger a 100% tariff on India - any such tariff would require the US president to specifically impose it on countries that remain among the top five buyers of Russian crude or gas 30 days after the law takes effect. The legislation would also require the US Trade Representative (USTR) to identify and review the five largest buyers of Russian energy every 180 days, with provisions for exemptions under certain circumstances.
Despite the renewed tariff threat, India has been increasing its purchases of US energy products, with imports rising 20% in FY26. Crude oil shipments from the US increased to $9.87 billion from $6.55 billion, taking total US energy purchases to $17.32 billion during the year. However, economist SP Sharma has identified 15 alternative markets where India can export the same products currently sold to the US, representing a potential $200 billion market beyond the US. According to Sharma, India's merchandise exports to the US increased to $87.3 billion in 2025-26 from $86.5 billion in 2024-25, despite tariff-related uncertainty. "We have another 15 markets where we can export our same products which we are exporting to the US. If the exports to the US are around 87-88 billion dollars in merchandise exports, then we have a large market of 200 billion dollars in another 15 countries in the same products," Sharma explained. Among the identified markets are the Netherlands, France, the UK, countries in Latin America, Saudi Arabia, the UAE and Nepal. Sharma noted that "If we are growing with US at 10-15 per cent, then our growth rate in exports with other markets is between 20-25 per cent," indicating India's diversification strategy is gaining momentum.
The renewed tariff threat comes as New Delhi and Washington continue to struggle to conclude an interim trade agreement, with India seeking a tariff advantage over competing economies. Commerce and Industry Minister Piyush Goyal has repeatedly said India would implement the agreement only after Washington ensures that Indian exporters enjoy a comparative advantage over competing economies, including those in its neighbourhood and the Association of Southeast Asian Nations (Asean). An Indian government official involved in the negotiations had previously said New Delhi did not expect the Russia sanctions legislation to affect the ongoing trade talks. According to the official, India and the US had already concluded discussions on Russia-linked tariffs after Washington withdrew the 25% levy in February, and the issue was unlikely to be reopened. However, the latest Senate action has revived these concerns, potentially complicating the already challenging negotiations and adding another layer of uncertainty for Indian exporters who are already facing multiple tariff regimes in the US market.
