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| India–Russia trade flows remain resilient despite global tariff challenges, with oil and energy driving a “particularly privileged strategic partnership.( Representing AI image) |
Why Russia Insists Tariffs Won’t Threaten India Ties: A Deep Dive into Economic Realities, Risks, and Strategic Autonomy
- Dr.Sanjaykumar pawar
Table of Contents
- Introduction
- Context: What Are the Tariffs & Why They Matter
- India-Russia Economic Ties: Scale and Composition
- How Tariffs Could Affect the Relationship (Actual & Potential)
- Mitigating Factors: Why the Ties May Be Less Vulnerable Than They Appear
- Strategic Autonomy & Foreign Policy Calculus
- Risks & Tipping Points to Watch
- Insights & Opinion
- Conclusion
- FAQs
1. Introduction
India and Russia share a relationship that goes far beyond numbers. It is rooted in decades of cooperation in energy, defense, technology, and diplomacy. Recently, however, this partnership has been questioned as the United States imposed new tariffs on Indian goods, partly in response to India’s continued purchase of discounted Russian oil. While some feared these measures could disrupt New Delhi’s ties with Moscow, Russian Foreign Minister Sergey Lavrov strongly dismissed those concerns. Speaking at the United Nations General Assembly, Lavrov emphasized that the India–Russia economic partnership is “not under threat.”
His statement underlines two crucial points. First, India’s foreign policy is guided by strategic autonomy—the freedom to pursue national interests without being pressured into choosing sides. Second, despite external challenges, both nations have shown remarkable resilience in maintaining and even expanding bilateral trade. For instance, India’s imports of Russian crude oil have surged in recent years, helping stabilize domestic fuel prices, while Russia has benefited from a reliable market amid Western sanctions.
Yet, questions remain. Are these ties truly immune to geopolitical shocks like tariffs, sanctions, or trade restrictions? Can India continue balancing its global partnerships with the US, the EU, and Russia without compromising its long-term goals?
This article will dive deep into these questions, examining the strengths and vulnerabilities of India–Russia economic relations. By analyzing trade data, structural dependencies, and global power dynamics, we will uncover whether Lavrov’s confidence is justified—or if hidden risks could test the resilience of this strategic partnership in the years ahead.
In short, the story of India and Russia’s economic ties is not just about oil or tariffs—it’s about the future of global alignments, national interests, and economic survival in an era of shifting power balances.
2. Context: What Are the Tariffs & Why They Matter
When we hear the word tariffs, it often sounds like a technical economic term. In reality, tariffs are much more than import duties—they are powerful levers that governments use to shape global trade and foreign relations. The recent US tariffs on Indian goods, some reaching as high as 50%, have sparked debate not only in business circles but also in diplomatic corridors.
Why the US Imposed Tariffs
The move is closely tied to India’s decision to continue purchasing discounted Russian oil despite Western sanctions on Moscow. For Washington, this is both an economic and strategic issue. By raising tariffs, the US hopes to discourage India from deepening energy ties with Russia, while nudging it closer to American and allied suppliers. In other words, tariffs are being used as pressure points to influence India’s trade behaviour.
The Risk of Secondary Sanctions
More worrying than tariffs are the threats of secondary sanctions. Unlike direct tariffs, these penalties target third parties such as banks, insurers, and shipping companies that help facilitate Russian oil trade. For Indian businesses, this creates a climate of uncertainty—raising costs, complicating logistics, and deterring investment. Even companies not directly dealing with Russia may feel the ripple effects if their financial partners or supply chains are disrupted.
Tariffs as Foreign Policy Tools
It’s important to see tariffs in a broader context. They are not just about protecting markets or collecting revenue. In this case, they serve as a foreign policy tool—shaping perceptions, testing India’s resolve, and signaling Washington’s priorities. For India, which values its strategic autonomy, this becomes a delicate balancing act between energy security, economic stability, and global partnerships.
3. India-Russia Economic Ties: Scale and Composition
Understanding what economic ties exist helps us assess how much leverage external tariffs might have.
Trade volumes & trade balance
- In FY 2024-25 (India financial year April-March), bilateral merchandise trade between India & Russia reached about US$ 68.7 billion. India exported roughly US$ 4.88 billion, while imports from Russia amounted to US$ 63.84 billion.
- The trade deficit (India importing much more than it exports to Russia) is very large — roughly US$ 59–60 billion in recent periods.
Composition of what’s traded
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Imports from Russia to India are heavily weighted toward energy commodities: crude oil is dominant, refined petroleum, coal, and fertilizers also figure significantly. For example, in the first half of 2025, crude petroleum alone made up ~73.5% of value of imports from Russia.
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Other imports include mineral resources, precious stones & metals, vegetable oils, etc.
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Exports from India to Russia are much smaller in scale, and more diverse. Major items: pharmaceuticals, organic & inorganic chemicals, machinery & electrical/electronics, iron & steel, agricultural products, consumer goods.
Investment & targets
- Both countries have set ambitious goals: bilateral trade target of US$ 100 billion by 2030.
- Investment targets include reaching US$ 50 billion by 2025 in bilateral investments. Actual flows include Russian investment in Indian sectors like oil & gas, petrochemicals, banking, railways, steel; Indian investment in sectors in Russia such as oil, gas, pharmaceuticals.
This shows a deep economic relationship, very much centered on energy and commodities. That creates both strength (mutual dependence, predictable needs) and vulnerability (exposed to global energy prices, sanctions, supply chain risk).
India and Russia share one of the most enduring and multifaceted economic partnerships in the world. To truly understand how external pressures—such as tariffs—might influence this bond, it’s important to examine the scale, structure, and focus of their trade and investment.
Trade Volumes & Trade Balance
The bilateral trade between India and Russia has surged in recent years, largely on the back of energy imports. In FY 2024–25, merchandise trade touched an impressive US$ 68.7 billion. However, the balance remains heavily skewed in Russia’s favor.
- India’s exports: About US$ 4.88 billion.
- Imports from Russia: A massive US$ 63.84 billion.
This creates a trade deficit of nearly US$ 59–60 billion, reflecting India’s heavy reliance on Russian oil and commodities. While such imbalances can pose risks, they also highlight the indispensable role Russia plays in meeting India’s energy and raw material needs.
Composition of What’s Traded
The import basket from Russia is dominated by energy commodities. Crude oil alone accounted for about 73.5% of imports in early 2025. Alongside oil, India also imports refined petroleum, coal, fertilizers, minerals, precious stones, and even vegetable oils.
On the other hand, India’s exports to Russia are modest but diverse. Pharmaceuticals, a globally competitive Indian sector, lead the list. Other exports include chemicals, machinery, electronics, steel, agricultural goods, and consumer products. This mix shows India’s ability to supply value-added goods, even if volumes remain small compared to imports.
Investment & Long-Term Targets
Beyond trade, both nations are working on ambitious investment goals. The two countries have agreed on:
- US$ 100 billion trade target by 2030.
- US$ 50 billion bilateral investments by 2025.
Russian capital has flowed into Indian oil & gas, petrochemicals, steel, railways, and banking, while Indian firms have invested in Russia’s pharmaceuticals, energy projects, and IT services.
Strengths and Vulnerabilities
The partnership is clearly energy-centric, giving both countries a predictable base of cooperation. For India, discounted Russian oil boosts energy security and lowers import bills. For Russia, India provides a vast, reliable market amid shifting global geopolitics.
However, dependence on commodities also brings vulnerabilities: exposure to global oil price swings, sanctions, and supply chain risks. Balancing these strengths and risks will be crucial as both nations push toward their long-term trade targets.
4. How Tariffs Could Affect the Relationship (Actual & Potential)
Russian Foreign Minister Sergey Lavrov has assured that India–Russia economic ties are “not under threat” despite the United States imposing tariffs on Indian goods. However, beneath the confident rhetoric, the reality is more nuanced. Tariffs, sanctions, and shifting global trade dynamics can create ripple effects across economies. To understand the risks more fully, we need to look at both the direct impact paths—the immediate channels through which tariffs affect trade—and the indirect or longer-term consequences that could reshape India’s economic and foreign policy strategies.
Direct Impact Paths
1. Cost Increases for Indian Exports
Tariffs are, at their core, a price signal. When the US places new tariffs on Indian goods, the direct consequence is higher costs for Indian exporters entering the American market. Over time, this erodes their competitiveness compared to countries not facing such penalties.
For example, sectors like textiles, leather, and chemicals, which depend heavily on price-sensitive buyers, could see shrinking demand. Indian exporters may also be forced to absorb some of the tariff cost themselves, reducing margins and discouraging future investment in these sectors. While Russia is not the destination for these exports, the revenue losses reduce India’s overall trade strength and make balancing the large deficit with Russia even harder.
2. Disruption of Energy Supply Economics
Energy is the backbone of the India–Russia trade relationship. Russian oil has been crucial for India’s energy security, especially given the discounts Moscow has offered since Western sanctions tightened. However, the US tariffs and the threat of secondary sanctions could make shipping Russian oil riskier and costlier.
If insurers, shippers, or financial institutions withdraw services out of fear of US penalties, India might face delays, higher premiums, or even shortages. This would force New Delhi either to pay more for Russian oil or pivot toward more expensive alternatives from the Middle East or Africa. Either way, the end result could be higher fuel costs for Indian consumers and industries, with inflationary knock-on effects across the economy.
3. Risk to Investment & Financial Relationships
Beyond physical goods, trade relies on financing, insurance, and global banking networks. Secondary sanctions could put pressure on Indian and Russian banks facilitating bilateral transactions. International institutions may restrict credit lines, increase compliance checks, or altogether avoid dealings linked to Russia.
This creates risk premiums—essentially hidden costs—that discourage businesses from engaging in cross-border projects. In the long run, it could limit investment flows into vital sectors like energy exploration, technology, and defense where both nations have strong cooperation.
4. Trade Imbalance Stress
India’s trade with Russia is heavily tilted: imports exceed exports by more than 10 times. While India buys energy and raw materials in bulk, its exports to Russia remain modest. Any increase in oil prices or logistics costs worsens this imbalance. Over time, the deficit could put additional pressure on India’s current account, weakening the rupee and limiting its fiscal flexibility. Tariffs might not directly reduce India’s imports from Russia, but they could magnify the strain of an already lopsided relationship.
Indirect / Longer-Term Effects
Altered Foreign Policy Alignment
Tariffs are not only economic tools; they are also political signals. The US tariffs indirectly challenge India’s balancing act of pursuing strategic autonomy. If the penalties intensify, New Delhi may face difficult trade-offs: align closer with Washington to preserve access to Western markets, or hold firm with Moscow to secure energy and strategic independence. Either choice carries costs, both economic and diplomatic.
Supply Chain Restructuring
Global trade is a web of interconnected supply chains. Tariffs and sanctions can push companies to rethink sourcing, shipping routes, and trading partners. For India, that could mean higher switching costs—investing in new logistics corridors, finding alternative raw material sources, or reshaping its export destinations. While these changes may strengthen resilience in the long run, they also bring short-term instability.
Domestic Political & Economic Backlash
Trade disruptions rarely stay confined to boardrooms; they spill into households. If tariffs trigger job losses in export-heavy sectors or drive up fuel and transport costs, the Indian middle class and lower-income groups will feel the pressure first. Rising inflation could erode purchasing power, while falling exports might slow GDP growth. Both outcomes could feed into domestic political discontent, forcing policymakers into a more defensive economic stance.
Credibility & Investor Confidence
Finally, uncertainty is the enemy of investment. Global investors—whether in manufacturing, finance, or technology—look for stability. Prolonged tariff disputes and sanctions risk create a perception of volatility in India’s external environment. This could raise the cost of borrowing, discourage foreign direct investment, and slow India’s ambitions of becoming a global manufacturing hub.
Lavrov’s confidence reflects the depth of India–Russia ties, especially in energy and defense. But while tariffs may not immediately sever the partnership, they introduce hidden costs, strategic dilemmas, and long-term vulnerabilities. India’s challenge will be to manage these pressures without losing its hard-won independence in foreign policy. The relationship is not under threat of collapse—but it is under undeniable strain.
5. Factors: Why the Ties May Be Less Vulnerable Than They Appear
When Russian Foreign Minister Sergey Lavrov asserted that India–Russia economic relations are “not under threat” from tariffs and sanctions, many observers raised eyebrows. After all, geopolitical tensions, U.S. tariffs, and the risk of secondary sanctions make the global trade environment uncertain. Yet, a closer look reveals several strong mitigating factors that support Lavrov’s optimism. From energy security to India’s foreign policy stance, multiple layers of resilience protect this long-standing partnership.
Strategic Importance of Oil & Energy Needs
Energy security sits at the very heart of India’s foreign and economic policy. As one of the world’s largest energy importers, India cannot afford to jeopardize reliable and affordable oil supplies. Here, Russia has stepped in as a crucial partner.
Since 2022, India has significantly increased imports of discounted Russian crude oil. These discounted supplies have helped cushion India from global energy price volatility and have directly contributed to moderating domestic fuel prices—something vital in a country where inflation and consumer costs are politically sensitive issues.
Moreover, the infrastructure and commercial networks for importing, shipping, and refining Russian oil are already well-established. Contracts, shipping routes, and refinery processes are fine-tuned for this supply chain. Replacing it would not only be time-consuming but also costly. This embeddedness makes sudden shifts away from Russian crude both impractical and undesirable in the short to medium term.
In essence, as long as energy security remains a top priority, India will continue to value its oil trade with Russia, insulating the relationship from immediate external pressures.
Domestic and Diplomatic Commitment to Autonomy
India’s foreign policy has consistently revolved around the principle of strategic autonomy. This means New Delhi makes its choices based on national interest, rather than aligning blindly with one global bloc or another.
This philosophy has been reinforced by top Indian leaders, including Prime Minister Narendra Modi and External Affairs Minister S. Jaishankar. Both have repeatedly emphasized that no foreign power will dictate India’s energy or trade partnerships. Jaishankar, in particular, has made strong public statements highlighting India’s “red lines,” insisting that India will not compromise its national interests under pressure.
Such clear diplomatic positioning gives India the political cover to continue dealing with Russia despite U.S. tariffs. In fact, maintaining ties with Russia is not only about economics—it is about safeguarding India’s sovereign decision-making space in a polarized world order.
Trade Diversification & Internal Balancing
Another factor reducing vulnerability is India’s broader push to diversify trade. New Delhi is working to expand exports beyond the United States and Europe, reaching into Southeast Asia, Africa, the Middle East, and Latin America. This strategy reduces over-reliance on any single trade partner.
At the same time, India is investing in logistics and connectivity corridors that support non-U.S. trade flows. Initiatives like the International North-South Transport Corridor (linking India with Russia and Central Asia) and the proposed Chennai–Vladivostok maritime corridor are aimed at strengthening alternative supply chains. These projects not only lower transportation costs but also build long-term resilience in India’s global trade network.
Flexibility also comes from the role of India’s private sector. Private refiners, unlike state-owned refiners, have more leeway in sourcing discounted Russian oil, helping balance supply even if government-to-government channels face scrutiny. This dual approach—state policy plus private enterprise—adds another layer of adaptability.
Economic Buffers & Resilience
Finally, India’s macroeconomic position offers important cushions against external shocks. With healthy foreign exchange reserves and relatively stable fundamentals, India has the ability to absorb temporary disruptions.
Discounted Russian oil itself acts as a financial buffer, saving billions in import bills despite the additional costs of sanctions compliance and logistics. These savings help ease inflationary pressures and strengthen fiscal stability.
Equally important, not all of India’s export sectors are exposed to U.S. tariffs. Industries like pharmaceuticals, electrical equipment, and electronics continue to find demand globally, including in Russia and other non-Western markets. This means that while some exporters may face challenges, others can redirect goods to alternative destinations, keeping overall export momentum alive.
While U.S. tariffs and sanctions create undeniable risks, India–Russia economic ties are shielded by several powerful factors: the indispensability of Russian oil, India’s commitment to foreign policy autonomy, ongoing efforts to diversify trade, and strong economic buffers. These elements collectively support Lavrov’s assertion that the partnership is “not under threat.”
In today’s volatile global economy, resilience comes not from avoiding risks but from having the flexibility, resources, and political will to manage them. On all three counts, India–Russia ties appear better positioned than critics might assume.
6. Strategic Autonomy & Foreign Policy Calculus
Lavrov’s claim is not simply an economic one—it is rooted in political strategy.
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Russia benefits from India’s continued engagement: it maintains markets, revenue, and strategic partnership, especially as Russia faces isolation or sanctions from many Western nations.
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India benefits by having diversified energy sourcing, which increases its bargaining power, reduces vulnerability to supply shocks or price volatility, and enhances geopolitical independence.
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In international groupings (BRICS, SCO, etc.), India and Russia often align or at least communicate closely on global issues (e.g., in United Nations, in forums debating sanctions, etc.). Lavrov’s statement underscores that despite US pressure, Russia expects India to be able to maintain its own decisions.
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Tariffs by the US could also backfire, e.g., hurting US-India trade in sectors beyond energy, or driving India closer to partnerships with other large powers. Indeed, Russian President Putin recently warned that US tariffs on trade partners might cause broader economic difficulties.
So the notion of “economic ties not under threat” is as much about the political cost of breaking or severely curtailing ties, as it is about the direct economic implications.
7. Risks & Tipping Points to Watch
While the relationship has resilience, there are thresholds and risk factors beyond which Lavrov’s optimism might be tested.
| Risk Factor | Why It Matters | Possible Trigger / Tipping Point |
|---|---|---|
| Intensification of secondary sanctions | Could hit banks, insurers, logistics chains; raising cost of doing business and increasing risk for Indian entities | If the US or its allies widen sanctions’ scope or tighten enforcement |
| Loss of discount on Russian oil | Much of the benefit for India comes from cheaper Russian crude; if discounts narrow, cost advantage erodes | Russia finds alternate buyers; discounts reduced via global price pressure or sanctions leaking |
| Energy supply disruption | Even minor logistical or shipping issues could lead to shortages or price spikes | Sanctions on tankers, insurance difficulties, port delays |
| Economic retaliation or escalation | If US or other partners impose broader tariffs, restrict trade deals, or limit investment | US-India free trade negotiations conditioned on energy behaviour; trade partners excluding India in supply chains |
| Domestic pressures in India | Inflation, rising fuel costs, job losses in export industries, public discontent | Energy cost spikes, high import bills, weakening rupee, export decline |
| Overdependence on single source of supplies | Risk to supply security, bargaining leverage slipping to supplier | If India remains highly dependent on Russian crude without diversification |
Monitoring these factors will be crucial for determining whether economic ties remain “not under threat” or if the relationship begins to fray under pressure.
8. Insights & Opinion
Based on the data and dynamics, here are key takeaways:
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Russia is largely correct in asserting that tariffs alone are unlikely to break or severely damage the India-Russia economic partnership in the short to medium term. The political will, mutual benefits (especially energy import benefits for India, revenue for Russia), and investment momentum make the relationship robust.
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However, “not under threat” does not mean “immune”. There are real vulnerabilities, particularly via secondary sanctions, energy price shifts, and trade imbalance strains. Over time, these could force adjustments.
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India's approach looks to be one of balancing: maintaining relations with Russia for energy and strategic reasons, while trying not to antagonize other powers (the US, allies) and diversifying trade partners so that risk is spread.
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India’s export profile to Russia is modest compared to its imports; unless India can increase its export volume and diversify more rapidly, the trade deficit will persist, increasing pressure from both external and domestic fronts.
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Geopolitically, India’s autonomy is central. The cost (economic, diplomatic) of being heavily influenced by US tariff demands could be seen as too high; the country seems willing to accept some friction for the sake of independence.
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Tariffs by the US may push India to deepen ties with Russia, and perhaps with other partners who also perceive US dominance critically (China, etc.), shifting global trade alignments.
9. Conclusion
Sergey Lavrov’s statement that economic ties between India and Russia are “not under threat” from US tariffs is defensible — but with important caveats. The relationship is deeply rooted, especially through energy and long-standing strategic partnership. India has both necessity and political motivation to maintain these ties, and the nature of its trade makes immediate disruption difficult.
Yet the risk is real: secondary sanctions, price shifts, export constraints, and domestic pressures could erode the relationship’s strength over time. To stay on stable footing, India must continue diversifying its trade, investing in alternative energy sources, expanding exports to Russia and elsewhere, and maintaining robust diplomatic and financial mechanisms to navigate sanctions.
For now, the economic ties are resilient. But staying resilient doesn’t guarantee being impervious.
10. FAQs
Q1: Are the tariffs by the US already hurting India-Russia trade?
A1: So far, the main effect has been increased cost and risk, particularly for Indian exporters to the US. Trade volumes between India and Russia remain high, especially imports of energy. There is some decline in Russian oil imports in certain months, but also countervailing actions (private refiners stepping in, etc.).
Q2: What are “secondary sanctions” and why are they worrying?
A2: Secondary sanctions are measures that penalize not only primary sanctioned entities (e.g., a Russian oil exporter), but third parties (banks, shipping companies, insurers) that facilitate their trade. They raise compliance and legal risks for companies involved in India-Russia trade, even if India itself is not directly sanctioned.
Q3: Can India find alternative oil suppliers if Russian supplies are constrained?
A3: Yes, but with limitations. Alternatives include Middle East (Saudi Arabia, UAE, Iraq), the US, Latin America etc. But substitutes may differ in quality, delivery cost, and require existing contract/infrastructure reshaping. There may also be higher costs, which could feed into inflation.
Q4: Could the tariffs backfire on the US?
A4: Possibly. Tariffs may reduce trade volume, but could also push India to align more with other partners, reduce dependency on the US supply chain, or reduce US influence. There is also risk of US consumers or companies losing out if costs increase or supply chains adjust away from US sources.
Q5: How does this affect India’s goal of achieving $100 billion in trade with Russia by 2030?
A5: Good question. Achieving that goal will require India to expand its exports to Russia significantly (to reduce the deficit), continue importing energy but in ways that manage risk, and build infrastructure and investment that supports broad bilateral activity. Tariffs and sanctions complicate that, but do not make it impossible.
Sources
Here are key credible sources used:
- India Brand Equity Foundation (IBEF), “Exploring India Russia Trade and Economic Relations” – bilateral trade data, export/import composition.
- Ministry of External Affairs, Government of India — India-Russia Relations official document.
- UN COMTRADE / Trading Economics — export data for India to Russia by sector.
- GTAI/Trade & Imports Reports — data on India-Russia import trends, share of oil and refined products.
- News reports (Reuters, CNBC, etc.) on US tariffs, Indian government responses, statements by Lavrov, Jaishankar.
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