US Signals Possible Rollback of 25% Tariffs on India Over Russian Oil Purchases

Background: The US Tariff Regime on Indian Goods

The United States currently imposes a 50% tariff burden on certain Indian goods, structured as follows:

  • 25% tariff imposed as a penalty for India’s purchase of Russian crude oil

  • 25% tariff imposed under the US’s so-called “reciprocal measures”, citing Indian duties on American products

However, a large category of Indian exports, particularly electronics and select industrial goods, remains exempt from these tariffs.

The punitive tariff regime emerged in the context of the Ukraine conflict, with Washington attempting to deter third-country energy trade with Russia through economic pressure rather than UN-backed sanctions.

US Treasury Secretary’s Statement: “A Path to Take Them Off”

On Saturday, US Treasury Secretary Scott Bessent publicly indicated that there is a “path” to remove the 25% tariffs imposed on India for buying Russian oil.

Bessent described the sanctions as a “success”, stating:

“We put 25% tariffs on India for buying Russian oil. And the Indian purchases by their refineries of Russian oil have collapsed.”

He clarified that:

  • The Russian oil-related 25% tariff is still in force

  • But its policy objective has been achieved, as India’s imports from Russia have declined sharply

This acknowledgment marks the first formal signal from Washington that tariff withdrawal is under consideration.

Decline in Indian Imports from Russia: Official Data

According to official Indian trade data released on January 15:

  • December 2025 imports from Russia declined 2.77% year-on-year, reaching $4.16 billion

  • April–December 2025 imports fell 9.41%, totalling $44.97 billion

The decline is directly linked to US sanctions pressure and tightening financial and shipping constraints on Russian crude.

India has nevertheless maintained that its energy procurement policy is guided solely by national interest, not geopolitical coercion.

India’s Legal Position: Energy Security and Sovereign Autonomy

India officially described the US action as:

“Unfair, unjustified and unreasonable”

From a legal standpoint, India’s position rests on:

1. Absence of UN Sanctions

Russia is not subject to comprehensive UN Security Council sanctions on oil exports.

Under international law, unilateral sanctions by one state do not bind third states unless adopted multilaterally.

2. WTO Compatibility Issues

Unilateral tariff penalties raise questions under:

  • Article I (Most Favoured Nation) of GATT

  • Article XI (General Elimination of Quantitative Restrictions)

Selective penalties based on geopolitical alignment can be argued as discriminatory trade practices.

Constitutional Framework: India’s Trade and Foreign Policy Powers

Article 73 – Executive Power of the Union

Foreign trade, diplomacy, and energy procurement fall squarely within the executive domain of the Union Government.

Article 253 – International Agreements

India is bound only by international obligations formally adopted, such as UN sanctions—not unilateral measures by foreign states.

Article 51 – Directive Principles

India’s foreign policy is guided by:

  • Sovereignty

  • Peaceful relations

  • Independent decision-making

This constitutional ethos underpins India’s resistance to coercive trade diplomacy.

Judicial Position: Limited Review of Foreign Policy Decisions

Indian courts have consistently held that foreign policy and trade negotiations are non-justiciable unless they violate fundamental rights.

Key Precedents:

Rustom Cavasjee Cooper v. Union of India (1970)
Courts may review economic policy only if constitutional rights are breached.

Reliance Industries Ltd v. Union of India (2010)
Energy pricing and sourcing decisions are matters of executive policy, not judicial intervention.

Balco Employees Union v. Union of India (2002)
Economic and strategic decisions fall outside the court’s domain unless manifestly arbitrary.

Thus, India’s oil sourcing choices remain legally insulated from domestic judicial challenge.

Europe’s Role and the US Criticism

Bessent sharply criticised European allies for not imposing similar tariffs on India, accusing them of prioritising trade over sanctions enforcement.

He alleged that:

  • India refined discounted Russian oil

  • Europe purchased the refined products

  • European states indirectly funded Russia’s war effort

His remarks came just days before EU leaders arrived in India to conclude negotiations on the India–EU Free Trade Agreement, described by Indian officials as the “mother of all deals.”

India–EU Trade Talks: Strategic Timing

European Council President Antonio Costa and European Commission President Ursula von der Leyen are visiting India as chief guests for Republic Day 2026, followed by the 16th India–EU Summit.

The convergence of:

  • US tariff reassessment

  • EU FTA negotiations

  • India’s reduced Russian imports

creates a critical geopolitical inflection point in global trade realignment.

India–US Bilateral Trade Negotiations: Where Talks Stand

India and the US are engaged in negotiations for a bilateral trade agreement, though progress has been uneven.

Key friction points:

  • US pressure on agriculture, dairy, and digital trade

  • India’s insistence on protecting domestic producers, described as “red lines”

Despite disagreements, officials confirm that talks are ongoing and constructive.

Recent Diplomatic Engagements

  • Commerce Minister Piyush Goyal met US Ambassador Sergio Gor and Senator Steve Daines on January 19

  • External Affairs Minister S. Jaishankar held wide-ranging talks with Gor on strategic cooperation

These engagements signal continued diplomatic engagement despite tariff tensions.

Strategic Conclusion: Tariffs as Leverage, Not Permanence

The US admission that there exists a “path” to remove the 25% tariff suggests that:

  • The tariff was always intended as leverage, not a permanent trade barrier

  • India’s calibrated reduction in Russian imports has altered the negotiating dynamic

  • Future tariff rollback will likely be tied to broader trade concessions and geopolitical alignment

For India, the episode underscores a larger lesson:

Strategic autonomy remains viable only when backed by economic resilience and diplomatic engagement.

As trade blocs realign and energy geopolitics reshape global commerce, India’s ability to navigate coercive economic measures without surrendering sovereign decision-making will define its role in the emerging multipolar order.

Location: Pune, Maharashtra, India

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