Blitz Bureau
NEW DELHI: India’s sharp reduction in Russian oil purchases — now accompanied by an unprecedented decision by its state-owned oil PSUs to contract 2.2 million tonne of LPG from the United States — signals a carefully crafted strategic reset, not a capitulation to Washington’s tariff pressure.
By pairing this major LPG deal with a parallel surge in crude imports from the Gulf and a steady rise in US-origin energy cargoes, New Delhi is making it clear that the recalibration of its energy basket is driven by long-term security and pricing logic.
At the same time, the shift creates political space to re-engage Washington on the punitive duties that have been hurting Indian exports. By subtly rebalancing its suppliers, India is positioning itself to reopen the door to a fairer trade arrangement with the Trump administration without appearing to have yielded ground.
Trump’s “Russian-oil penalty tariff” — a cumulative 50 per cent duty on a wide range of Indian exports — has unsettled bilateral trade and squeezed sectors heavily dependent on the US market.
Washington insisted the duty was justified because India’s refiners continued buying large volumes of discounted Russian crude, indirectly strengthening Moscow’s economic position.
New Delhi contested the logic, calling the penalty disproportionate and hypocritical. But while challenging the tariff politically, it has simultaneously begun adjusting its energy basket economically and diplomatically.
Over the past two months, state-owned refiners have scaled back spot purchases of Russian Urals. The pause comes after nearly two years of Russian crude forming the backbone of India’s energy security, at one point accounting for a third of all imports.
The new pattern is unmistakable: Russian barrels are being replaced with crude from the Gulf — Iraq, Saudi Arabia and the UAE — and with rising volumes from the United States. India’s US crude imports have surged this year, and long-term arrangements for LNG and now large-ticket LPG purchases suggest this shift is not temporary.
While the Government maintains that these choices are guided by price, diversification and supply security, the diplomatic utility is impossible to miss. By reducing reliance on Russian oil — and simultaneously boosting energy trade with the US — India undercuts the basic rationale behind Washington’s punitive duties.
In the White House’s calculus, if the tariffs were meant to punish India for “funding Russia’s war machine,” the energy shift offers a face-saving exit. It lets Trump claim that pressure worked, while giving India a basis to demand rollback.
New Delhi, however, is careful not to appear as if it is bending. External Affairs Minister S. Jaishankar has repeatedly asserted that India does not take decisions under coercion, insisting that the country’s energy policy is shaped by affordability, security and sovereign choice.
The Government also points out that Russia’s once-steep crude discount has narrowed sharply; Gulf supplies are becoming commercially comparable. When economics and geopolitics align, the pivot appears rational rather than forced.
For India, the potential rewards extend beyond tariff relief. A revival of trade talks with the US — long stuck over agriculture, digital taxes and market access — would create a platform to secure better terms for textiles, pharmaceuticals, engineering goods and other labour-intensive exports hit hardest by the 50 per cent duties.
Reducing the tariff back to 25 per cent, or eliminating the Russia-related penalty entirely, would restore competitiveness at a time when domestic manufacturing is seeking global footholds.
For Washington, too, the shift is attractive. It reinforces the US push to become a major supplier of LNG, LPG and crude to Asia. It enables the Trump administration to frame India’s redirection as geopolitical alignment, even as New Delhi insists it is merely diversifying. Politically, the White House can present tariff reversal not as a climbdown but as a reward for “correcting course.”
The risk, however, is that India may have moved first without securing firm guarantees in return. If Washington delays or dilutes tariff relief, refiners could face a higher import bill just as domestic demand rises. And if geopolitical conditions deteriorate — from Middle Eastern instability to US electoral turbulence — India’s energy security could become more vulnerable.
Critics in Delhi warn that a temporary shift may not be enough to change Washington’s stance. The US could still press India on long-standing irritants such as dairy access, agricultural barriers and digital taxation.
The energy pivot helps, but it does not resolve the structural frictions that have repeatedly stalled negotiations. Moreover, if tariff rollback does not materialise soon, domestic political voices may begin casting the shift as an unnecessary concession.
Yet, set against the broader geopolitical tableau, India’s recalibration appears intentional, measured and firmly within its doctrine of strategic autonomy. Russia will remain an important energy partner — but no longer the dominant one. The Gulf regains primacy. And the US emerges as a growing, though not exclusive, player in India’s energy ecosystem.
Whether this reset succeeds in unlocking tariff reversal and fast-tracking trade talks will depend on how deftly both sides navigate the next few weeks — and whether Washington is prepared to treat India’s diversification as cooperation, not capitulation.