Potential Impact on India’s Economy if Russian Oil Imports Cease
- August 8, 2025
- 0
India’s Rising Fuel Costs Amid Russian Oil Import Halt
India’s crude oil import bill is projected to surge by USD 9 billion this fiscal year and USD 12 billion the next if the country halts Russian oil imports. This potential increase comes in response to Washington’s recent actions against New Delhi over its continued purchases of Russian crude. The State Bank of India (SBI) suggests that India could consider sourcing oil from Iraq, Saudi Arabia, and the UAE, which were its primary suppliers before the Ukraine conflict.
US Tariffs and Their Implications
Tensions between India and the US have escalated following the US decision to impose a 25 percent duty on Indian goods, which could double to 50 percent due to India’s Russian oil imports. This move positions India alongside Brazil in facing the highest US tariffs. The SBI report highlights that if India ceases Russian oil imports, its fuel bill might increase by USD 9 billion in FY26 and USD 11.7 billion in FY27.
Global Crude Supply Dynamics
Russia contributes 10% to the global crude supply. If countries cease purchasing from Russia, crude prices may rise by 10% unless other nations boost production. Since 2022, India has significantly increased its purchase of discounted Russian oil, which was capped at USD 60 per barrel to ensure energy security amid Western sanctions on Moscow.
India’s Oil Import Strategy
In FY25, Russia accounted for 35.1% of India’s total oil imports, up from a mere 1.7% in FY20. Indian refiners typically source oil from Middle Eastern producers through flexible annual contracts. If Russian supplies are cut off, India could revert to these traditional suppliers.
Impact on Agriculture and Pharmaceuticals
The agricultural sector may also be affected by US tariffs. The SBI report emphasizes protecting Indian farmers from global conglomerates’ predatory practices. While no tariffs have been imposed on pharmaceutical exports yet, a potential 50% tariff could impact earnings by 5-10%. India’s role as a key supplier of affordable medicines could also be affected.
