The US Senate has advanced a revised sanctions bill that could impose secondary tariffs of up to 100% on countries importing significant volumes of Russian energy, with India among the key targets.
Russia remains India's largest crude supplier, with imports worth $40.82 billion in FY26 and accounting for nearly 43% of India's crude import bill in the first quarter of FY27.
The proposed legislation could complicate ongoing India-US trade negotiations, as New Delhi balances energy security, discounted Russian crude purchases and efforts to deepen economic ties with Washington
Why India's $41 Billion Russian Oil Trade Is Back in Washington's Crosshairs
A revised US Senate sanctions bill targeting buyers of Russian energy could put India's largest crude import source under fresh scrutiny, adding a new layer of uncertainty to India-US trade negotiations
Summary
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The US Senate has advanced a revised sanctions bill targeting countries that import Russian energy, threatening to penalise India's largest crude import relationship.
Reports said that the proposed legislation could create friction in New Delhi's broader relationship with Washington, even as both nations negotiate a trade deal.
What was once a minor supply source has become India's primary crude channel, driven by discounted Russian barrels after Western sanctions reshaped global oil flows following the Ukraine war. The bill has put these crucial purchases under a geopolitical spotlight.
Evolution of Sanctions Bill
A bipartisan group of US senators, including Lindsey Graham and Richard Blumenthal, first introduced the bill in 2025 to pressure countries buying Russian energy.
Lawmakers revised the original proposal of up to 500% tariffs after months of negotiations to a secondary tariff framework of up to 100%.
The latest version empowers the US President to impose these secondary tariffs on countries maintaining significant energy trade with Moscow.
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Washington states that these measures aim to choke Russia's oil revenues, which it argues finance military operations in Ukraine.
The bill identifies India, China, Slovakia, Hungary and Azerbaijan as major targets.
While the legislation cleared a key Senate hurdle, it still requires House of Representatives approval and faces domestic opposition over potential consumer impacts.
Dominance of Russian Crude
India imports more than 80% of its crude oil requirements, leaving it highly exposed to global price volatility. Discounted Russian crude has enabled Indian refiners to lower procurement costs during periods of elevated global prices. TradeStat data reveals, as reported by Moneycontrol, that India's Russian crude imports skyrocketed from $2.47 billion in FY22 to $31.02 billion in FY23.
Purchases rose further to $46.49 billion in FY24 and peaked at $50.28 billion in FY25, making Moscow India's largest supplier.
Although imports moderated in FY26, declining nearly 19% year-on-year to $40.82 billion, Russia maintained its top position.
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This dominance continued into the first quarter of FY27, when imports from Russia stood at $21.06 billion, accounting for nearly 43% of India's total crude import bill.
Diversifying the Crude Basket
While Russian crude remains dominant, New Delhi continues to expand its sourcing base to remain flexible.
This diversification is evident in rising purchases from the US, where crude imports grew from $6.55 billion in FY25 to $9.87 billion in FY26, an increase of more than 50%.
During the first quarter of FY27, India imported $1.58 billion worth of US crude. Other major suppliers during the April-June quarter included the UAE, which supplied crude worth $7.05 billion, accounting for more than 14% of India's imports.
Imports from Oman stood at $2.33 billion, followed by Venezuela at $2.15 billion, Brazil at $2.14 billion and Nigeria at $2.07 billion.
Bilateral Trade Negotiations Friction
The oil sanctions debate unfolds against the backdrop of broader India-US trade negotiations, where tariffs remain a key point of contention.
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Most Indian exports face an additional 10% tariff over applicable most-favoured-nation (MFN) duties under the Section 301 framework linked to forced labour concerns, which replaced the temporary Section 122 tariff.
Steel and aluminium exports continue to face higher duties under Section 232, though pharmaceuticals, smartphones and semiconductors remain exempt.
Between August 27, 2025 and February 23, 2026, nearly 55%of India's exports to the US faced the normal MFN tariff plus an additional 50% duty, a report by GTRI said.
This extra levy comprised a 25% reciprocal tariff and a 25% surcharge linked to India's purchases of Russian oil. Another 37 per cent of exports remained outside the reciprocal tariff system, continuing to attract only applicable MFN duties.
In February 2026, the two nations announced an interim trade framework. Washington proposed reducing the reciprocal tariff burden to 18%, while New Delhi committed to buying more US energy and technology products.
However, before the framework could take effect, the US Supreme Court struck down the broader reciprocal tariff system imposed under the International Emergency Economic Powers Act (IEEPA).
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This forced the US administration to rely on the temporary Section 122 tariff, complicating negotiations as both sides work towards a permanent, issue-specific framework.