Amidst the Russia-Ukraine conflict, NATO Secretary-General issued warnings, stating that India, China, and Brazil can face secondary US sanctions if they persist in trade of oil and gas with Russia.
The global landscape shifted when the Russia-Ukraine conflict started in February 2022. What started as a regional conflict has evolved into a web of sanctions, counter-sanctions, and economic warfare, now threatening countries far beyond the battlefield. Amidst this evolving landscape, the NATO Secretary stated that India, China, and Brazil could face "very hard" secondary US sanctions if they persist in significant trade with Russia, particularly concerning oil and gas.
This warning followed the US President's announcement of a potential 100% secondary tariff on buyers of Russian exports. Concurrently, US Senators introduced a bipartisan bill proposing even more severe tariffs, potentially up to 500%, on imported goods from countries that continue to purchase Russian oil, gas, uranium, and other products.
This legislation targets India and China due to their energy ties with Russia. The proposed tariffs would apply to all merchandise exports from targeted countries to the US, representing a departure from previous, more targeted sanctions approaches.
Understanding Secondary Tariffs and Their Impact
Secondary sanctions are a type of trade restriction where countries that do business with a sanctioned country can also face penalties. This approach aims to discourage others from indirectly supporting the targeted country’s trade or economy. Unlike primary sanctions that directly target specific countries or entities, secondary sanctions seek to punish third parties for conducting business with sanctioned entities. The proposed US tariffs on Russia's trade partners represent a form of this mechanism.
The US President’s proposed 100% secondary tariffs would target whole countries, not just individual companies or specific deals. This means all goods from those countries could face higher taxes when entering the US, as a way to pressure them to change their trade relations. This approach would affect India's entire $45.7 billion trade surplus with the United States, potentially disrupting key sectors including textiles, pharmaceuticals, electronics, and information technology services.
The current global situation shows that trade and economic relationships are used as tools to apply pressure in international relations. This means trade, which should be about cooperation, is now used to pressure countries politically. This poses a significant challenge to the economic sovereignty of developing economies like India, which rely on export revenues for growth and employment.
India's Energy Security Calculus: Russian Oil Dilemma
India-Russia trade in the energy sector cannot be understood without grasping the reality of India's energy security. The country imports nearly 90% of its crude oil requirements, making energy security a cornerstone of national policy. After Western sanctions were placed on Russia following the Ukraine conflict, Russian oil producers started offering discounts. As Russian oil became cheaper, Indian refiners increased their imports.
With this, Russia became India's leading crude oil supplier, accounting for approximately 40% of total crude imports by June 2025. This shift helped India save an estimated $13 billion in energy costs, directly benefiting consumers and helping control domestic inflation.
However, India's energy strategy extends beyond purchases from Russia. The country has been diversifying its energy portfolio, significantly increasing oil purchases from the United States and Brazil.
US crude imports surged over 50% in the first half of 2025, while Brazilian shipments grew by 80% year-on-year. This diversification serves multiple purposes: reducing over-dependence on any single supplier, strengthening bilateral relationships with key partners, and building resilience against future supply disruptions.
Strategic Autonomy Under Pressure: Multi-Alignment Challenge
India's foreign policy philosophy has evolved from Cold War-era non-alignment to contemporary strategic autonomy, reflecting the realities of a multipolar world. This approach, often termed multi-alignment, allows India to engage with multiple global powers without being constrained by exclusive alliances.
The Russia-Ukraine conflict tested this approach. India has maintained a calibrated stance, emphasising dialogue and peaceful resolution while abstaining from UN resolutions regarding the conflict. This position has drawn criticism from the West but reflects India's broader strategic calculus.
On one hand, it's deepening partnerships with blocs like the Quad (India, US, Japan, Australia) and the Indo-Pacific Economic Framework. On the other hand, it's careful to maintain ties with Russia and participate in forums like BRICS and the Shanghai Cooperation Organisation.
However, the challenge lies in managing competing pressures. Western partners seek India's alignment against Russia, while Moscow expects support against Western sanctions. India's response has been to position itself as a global actor and mediator, providing humanitarian aid to Ukraine while maintaining open communication channels with Russia.
Economic Implications and Trade Diversification Strategies
The potential imposition of tariffs on Indian exports would create ripple effects throughout the economy. Key sectors like textiles, which need raw materials from Russia, and pharmaceuticals, which rely on low-cost energy, can face problems if stricter trade restrictions are imposed. The information technology sector, despite having minimal direct Russia exposure, could suffer from broader trade restrictions.
India’s approach to managing these risks centres on broader trade diversification. This strategy serves a dual purpose: it reduces India’s dependence on any single market especially given the threat of potential tariffs and also strengthens diplomatic relations with key partners like the US.
India is exploring export diversification, shifting market focus from the US to regions like the European Union, ASEAN, and Africa. This strategy reduces over-dependence on any single market while building resilience against future trade disruptions.
The government has also accelerated domestic manufacturing initiatives through Production Linked Incentive (PLI) schemes in electronics, textiles, and pharmaceuticals. These programs aim to reduce import dependence while enhancing export competitiveness, creating a more resilient economic structure.
Path Ahead
India's navigation of the Russia trade challenge reflects broader themes in contemporary international relations. India's approach to managing potential tariffs involves building economic resilience across multiple dimensions. This involves finding new suppliers, making more goods within the country, and setting up backup plans in key sectors. The government's focus on self-reliance (Atmanirbhar Bharat) takes on new significance in this context.
The private sector has also begun adjusting to potential trade disruptions. Companies are exploring new markets, diversifying supply chains, and investing in domestic production capabilities. This adaptation process, while challenging, could ultimately strengthen India's economic structure and reduce vulnerabilities to external shocks.
Financial sector preparations include developing alternative payment systems and strengthening currency swap arrangements with key partners. These measures aim to reduce dependence on Western-dominated financial infrastructure while maintaining access to global markets.
Conclusion
India Russia trade reflects India's broader challenge: how to pursue development aspirations and national interests while managing pressures from competing global powers. The NATO Secretary's warning adds diplomatic complexity to a challenging situation.
Success in this endeavour will require maintaining the balance between pragmatic engagement and principled independence that has characterised India's approach to international relations. India's foreign policy will continue to evolve as global power dynamics shift, but the core principle of autonomy remains central to the country's approach.
India's response to these challenges will shape not only its economic future but also its role in the emerging multipolar world order. The country's ability to maintain autonomy while managing power competition will determine its success in achieving its development goals and security objectives.
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