By T N Ashok
The passage by the US Congress of the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 has confronted India with a problem that is simultaneously diplomatic, economic and strategic.
The immediate headline is stark: the legislation creates a statutory pathway allowing President Donald Trump to impose tariffs of up to 100 per cent on countries that continue to purchase significant quantities of Russian oil and gas. India, one of the largest buyers of Russian crude, is explicitly exposed to that possibility.
But the 100 per cent tariff is not yet an Indian tariff. Congress has passed the legislation; the President must still sign it, and the actual use, scale and scope of the tariff authority would remain a presidential decision. That distinction is crucial because the political drama surrounding the legislation has sometimes obscured the economic question that India now has to confront: how does New Delhi protect its energy interests without allowing Russian oil to become the trigger for a much broader deterioration in its relationship with Washington?
The US House approved the measure 262-159 on September 16, following an 86-11 Senate vote on August 7. The legislation targets Russian officials, financial institutions and the so-called shadow fleet used to transport Russian energy, while giving the President authority to impose tariffs of as much as 100 percent on major purchasers of Russian petroleum or natural gas.
For New Delhi, the timing could hardly be more sensitive. India’s official response has been firm but deliberately measured. The Ministry of External Affairs said India remains “firmly committed” to ensuring energy security for its 1.4 billion people and will continue diversified sourcing based on evolving market conditions.
More significantly, the government said the potential implications of the American legislation for the bilateral relationship and international energy markets had already been conveyed to senior American interlocutors. New Delhi also said it would take all necessary measures to protect India’s trade and economic interests and work with industry and trade bodies on the consequences.
The language reveals the government’s balancing act. Delhi is not threatening Washington with retaliation. Nor is it announcing that India will abandon Russian crude. Instead, it is asserting that the choice of India’s energy suppliers remains fundamentally an Indian decision.
That position is rooted in economics as much as geopolitics. Russian crude became particularly attractive to Indian refiners after Western sanctions disrupted traditional Russian energy markets. India was able to buy substantial volumes at discounted prices, refine some of that crude and sell petroleum products into international markets.
For an economy of India’s scale, replacing a major supplier overnight would not simply be a diplomatic gesture. It could affect crude-import costs, refining economics, inflation, the current account and ultimately consumers.
That is why the government’s reference to 1.4 billion Indians is more than diplomatic rhetoric. It is the foundation of India’s argument that energy policy cannot be separated from domestic economic security.
Indian newspapers have focused intensely on the potential 100 per cent tariff because the measure threatens something beyond the oil market: India’s access to the American consumer. While The Indian Express highlighted the fact that India is the second-largest export market for Russian crude and explained how the legislation could affect Indian trade with the United States, the Times of India stressed that the legislation does not automatically impose a 100 per cent duty, but creates a pathway for the Trump administration to impose such tariffs under specified circumstances.
That distinction matters enormously. A 100 per cent tariff on Indian exports would not necessarily mean that India’s exports simply fall by 100 per cent. American importers would have to decide whether to absorb some of the cost, Indian exporters might reduce prices, supply chains could be redirected and some American buyers could search for alternative suppliers.
But the uncertainty itself would be damaging. Indian manufacturers negotiating long-term contracts with American buyers would suddenly have to price in a political variable over which they have no control. Textiles, pharmaceuticals, engineering goods, gems and jewellery, chemicals and other export sectors with substantial American exposure could find themselves negotiating in an environment in which the tariff ceiling is potentially enormous.
That is why Indian economic commentary has tended to focus not simply on the tariff that might eventually be imposed but on the uncertainty created by the legislation.
The economic debate in India is now divided between two broad questions. The first is whether India can afford to reduce its Russian oil purchases. The second is whether India can afford not to. There is no cost-free answer. If India switches rapidly from discounted Russian crude to alternative suppliers, the immediate consequence could be higher import costs, particularly if global oil prices are already elevated.
If India continues purchasing Russian crude and Washington responds with punitive tariffs, the cost could instead appear on the export side of the economy. This is the uncomfortable arithmetic confronting policymakers: cheaper Russian oil can support India’s energy balance, but continued dependence on it could increase India’s exposure to American trade retaliation.
Economic analysts cited in Indian media have therefore concentrated on the potential impact on exports and trade negotiations rather than assuming that the worst-case tariff will automatically materialise. Industry has also urged continued engagement. CII president Ramakrishnan Mukundan has argued that Indian industry can prepare for different scenarios but that tariffs cannot become a permanent feature of the India-US trading relationship.
That is significant because the United States is one of India’s most important export markets. The Indian economy therefore has a strong interest in keeping the dispute from becoming a permanent structural conflict.
The Graham Act is also beginning to acquire a domestic political dimension in India.
For the Modi government, the issue touches the longstanding principle of strategic autonomy: India wants closer relations with Washington without allowing those relations to determine its dealings with Moscow. The government’s current position is consistent with that approach. It has not rejected the United States as a strategic partner. Nor has it accepted the argument that Washington should determine where India purchases its oil.
Opposition parties, meanwhile, have an opportunity to question whether the government’s foreign-policy balancing has produced sufficient economic protection against American pressure.
The resulting political debate is likely to revolve around a fundamental question: did India’s closer strategic alignment with Washington provide enough economic leverage to prevent the Russian-oil issue from becoming a trade dispute? That question cannot yet be answered definitively. What is clear is that the Graham Act has complicated the assumption that the strategic partnership and the economic relationship can always be insulated from disagreements over Russia.
The immediate Indian response is likely to involve several tracks rather than one dramatic decision.
First will come diplomacy. Delhi will seek clarity from Washington about how the new authority would be applied and whether India could qualify for exemptions, waivers or other accommodations. Second will be energy diversification. India can reduce its vulnerability by expanding purchases from the Middle East, the United States and other suppliers when the economics make sense.
Third will be trade diplomacy. Indian negotiators will have an incentive to separate the Russian-oil dispute from the broader India-US commercial relationship. Fourth will be preparation for retaliation or adjustment if tariffs are actually imposed. Indian exporters and the government would need to identify vulnerable sectors and alternative markets.
But there is another option that cannot be ignored: the possibility that Washington’s threat itself becomes the bargaining instrument. The legislation gives Trump considerable leverage without requiring him to use the maximum tariff immediately. The mere existence of a statutory 100 percent ceiling could become part of negotiations over India’s Russian oil purchases, market access and the wider bilateral trade relationship.
In other words, the weapon may be more useful to Washington as leverage than as an actual 100 per cent tariff.
Russia and China complicate India’s choices. India is not confronting this pressure in isolation. China is also one of the largest purchasers of Russian energy and faces the same broad American strategy. Beijing has already maintained that its energy and trade cooperation with other countries is based on equality and mutual benefit and should not be subject to third-party interference.
Moscow, meanwhile, has an obvious interest in keeping India and China as major customers. This creates an unusual triangular equation. Washington wants to reduce the revenue flowing to Moscow. Moscow wants to preserve its energy markets. India wants inexpensive energy without sacrificing its American export market. China wants to preserve its energy relationship with Russia while resisting American economic pressure.
The Graham Act therefore has implications far beyond sanctions against Russia. It places the world’s three largest political poles—Washington, Moscow and Beijing—into a contest in which India has substantial economic interests on all sides.
The real test begins after signature. The most consequential phase of the Graham Act story has not yet begun. It begins if and when President Trump signs the legislation and then decides whether to use the tariff authority against India. Until that happens, the 100 per cent figure should be treated as a maximum statutory possibility, not an existing tariff.
But the legislation has already changed the negotiating environment. For India, the challenge is to preserve three interests simultaneously: affordable energy, access to the American market and strategic autonomy.
New Delhi’s present response—firm on energy security, cautious toward Washington and open to continued engagement—reflects that three-way balancing act. The Graham Act has nevertheless exposed the vulnerability at the heart of India’s foreign-economic strategy.
India has spent years trying to maintain close relations with Washington while preserving its traditional relationship with Moscow. That strategy has worked when the two relationships could coexist without imposing direct economic costs on each other.
The new American legislation tests whether that separation can survive. The question facing New Delhi is therefore not simply whether India should continue buying Russian oil. It is whether India can continue doing so without allowing Russian oil to become the price of admission to the American market.
That is a much larger strategic question—and one that will increasingly shape the next phase of India-US relations. (IPA Service)
