India Agrees to Suspend Russian Oil Purchases Under Interim Trade Deal with the US

India has agreed to halt purchases of Russian crude oil as part of an interim trade framework with the United States, officials confirmed, though New Delhi has declined to provide detailed explanations regarding Washington’s specific demands. Sources indicate that resuming oil imports from Russia could trigger the reinstatement of certain US tariffs.

In an interview, Indian Commerce Minister Piyush Goyal hinted that India has safeguards built into the trade deal to protect its interests. “Every trade agreement inherently contains provisions for recalibrating duty concessions,” he said. “Even under WTO rules, there are mechanisms to adjust benefits if future developments threaten the advantages under a trade agreement.”

The interim trade framework has already provided immediate benefits to exporters of labor-intensive goods. From 7 February, tariffs on such items have been reduced from 50% to 25%, with plans to further lower them to 18% within days.

Minister Goyal expressed optimism about overall trade growth with the US. “Reciprocal tariffs have been substantially lowered, making our exports highly competitive compared to China and other rivals. This will attract significant investment into India as well,” he added.

Under the agreement, India has committed to importing $50 billion worth of goods from the US over the next five years, covering sectors such as energy, aviation and aircraft parts, precious metals, technology products, and coking coal. Goyal emphasized that India is confident in the quality and competitiveness of these imports. “Currently, our imports in these categories are around $30 billion annually. Within five years, this could rise to nearly $2 trillion. By diversifying supply sources and ensuring competitive pricing, we aim to maximize benefits,” he said.

While exporters remain positive about the tariff reductions, concerns persist regarding the linkage between Russian oil imports and US tariff adjustments. The US executive order explicitly ties the 25% tariff relief to India’s commitment to suspend Russian crude oil purchases. Former President Donald Trump’s administration had warned that any resumption of Russian oil imports could prompt a reinstatement of tariffs.

The interim trade deal is seen as a strategic compromise, balancing India’s energy security needs with access to tariff concessions in the US market. It reflects the increasing interdependence of bilateral trade, particularly in labor-intensive goods and energy sectors, as both countries work to deepen economic engagement.