India-US trade deal: 25 per cent penalty is off, monitoring of Russian oil imports in

The three elements – stopping Russian oil imports, buying energy from the US and boosting defence cooperation – are part of the larger strategic deal between India and the US.

There was no immediate response from Delhi on the announcement about Russian oil. But on February 5, in first remarks since Trump’s statement that Prime Minister Narendra Modi had “agreed to stop buying Russian oil” and “to buy much more from the US and, potentially, Venezuela”, and that “this will help end the war in Ukraine”, the Ministry of External Affairs said India was “diversifying energy sourcing” in keeping with “objective market conditions and evolving international dynamics”.

On Saturday too, officials pointed to the remarks by the MEA spokesperson who said “insofar as India’s energy sourcing is concerned, the government has stated publicly on several occasions that ensuring the energy security of 1.4 billion Indians is the supreme priority of the government. Diversifying our energy sourcing in keeping with objective market conditions and evolving international dynamics is at the core of our strategy to ensure this. All of India’s actions are taken and will be taken with this in mind”.

Trump’s signed order, titled ‘Modifying duties to address threats to the US by the Russian government’, stated: “In Executive Order 14329 of August 6, 2025 (Addressing Threats to the United States by the Government of the Russian Federation), I found that the national emergency described in Executive Order 14066 has continued and that the actions and policies of the Government of the Russian Federation continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States. To deal with that threat, I determined that it was necessary and appropriate to impose an additional ad valorem rate of duty of 25 per cent on imports of articles of India, which, at that time, was directly or indirectly importing Russian Federation oil.”

“I have received additional information and recommendations from senior officials regarding India’s efforts to address the national emergency described in Executive Order 14066. Specifically, India has committed to stop directly or indirectly importing Russian Federation oil, has represented that it will purchase United States energy products from the United States, and has recently committed to a framework with the United States to expand defense cooperation over the next 10 years.”

“After considering the information and recommendations these officials have provided to me, among other things, I have determined that India has taken significant steps to address the national emergency described in Executive Order 14066 and to align sufficiently with the United States on national security, foreign policy, and economic matters. Accordingly, I have determined to eliminate the additional ad valorem rate of duty imposed on imports of articles of India pursuant to Executive Order 14329. In my judgment, this modification is necessary and appropriate to deal with the national emergency declared in Executive Order 14066,” his order stated.

“Effective with respect to goods entered for consumption, or withdrawn from the warehouse for consumption, on or after 12:01 a.m. eastern standard time on February 7, 2026, products of India imported into the United States shall no longer be subject to the additional ad valorem rate of duty of 25 per cent imposed pursuant to Executive Order 14329.”

It also put in place a monitoring mechanism. “The Secretary of Commerce, in coordination with the Secretary of State, the Secretary of the Treasury, and any other senior official the Secretary of Commerce deems appropriate, shall monitor whether India resumes directly or indirectly importing Russian Federation oil, as defined in section 7 of Executive Order 14329. If the Secretary of Commerce finds that India has resumed directly or indirectly importing Russian Federation oil, the Secretary of State, in consultation with the Secretary of the Treasury, the Secretary of Commerce, the Secretary of Homeland Security, the United States Trade Representative, the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, and the Assistant to the President and Senior Counselor for Trade and Manufacturing, shall recommend whether and to what extent I should take additional action as to India, including whether I should reimpose the additional ad valorem rate of duty of 25 per cent on imports of articles of India.”

This step puts India in a diplomatically difficult position. After the Russian invasion of Ukraine, India had increased oil imports since Moscow was offering discounted rates. Delhi’s rationale was that its decision was guided by commercial interests since it wanted to cushion the inflationary impact of crude price hikes, and so it was buying from the lowest rate-offering countries, and Russia was the most competitive in that area. India also said that the government was not involved in the process of buying oil, and it was the companies that made the decisions.

This worked well until Trump assumed office last year. Failing to broker peace between Russia and Ukraine despite attempts over six months, he began squeezing the biggest buyers of Russian energy. India, as a result, faced the heat – and the 25 per cent tariff penalty for buying Russian oil.

In the last few months, India’s Russian oil imports have declined steadily to a three-year low, as per tanker data. This followed US sanctions against Russia’s top oil producers and exporters Rosneft and Lukoil. From the 2025 peak of 2.09 million barrels per day (bpd) in June, India’s Russian oil imports dropped to 1.16 million bpd in January 2026, according to data from commodity market analytics firm Kpler.