Davos—U.S. Treasury Secretary Scott Bessent signaled Friday that the Trump administration may lift 25% tariffs on Indian goods if New Delhi continues reducing Russian oil imports. Speaking at the World Economic Forum, Bessent praised India's sharp drop in Russian crude purchases as a major policy win and hinted relief could soon follow.
Key Facts
• Indian refineries cut Russian oil imports by 29% month-on-month in December, reaching the lowest levels since price cap policies began
• The 25% tariff was imposed on India specifically for purchasing Russian oil; total tariffs on Indian goods now reach 50% after August doubling
• Bessent stated
suggesting negotiations could unlock tariff removal if buying patterns continue declining
Bessent's remarks represent a potential breakthrough in escalating trade tensions between Washington and New Delhi. The Treasury Secretary emphasized that Indian refinery purchases of Russian crude have
in restricting Moscow's revenue streams.
Reliance Industries' Jamnagar refinery, India's largest, slashed Russian oil imports by nearly 49% in December alone. State-owned refineries like Indian Oil Corporation also reduced purchases by 15%, signaling coordinated compliance across India's energy sector.
The geopolitical calculation behind Bessent's comments centers on the Ukraine war. By purchasing Russian crude and refining it, Indian companies generate profits while Europe buys the finished products—effectively financing Russia's war effort, according to U.S. officials.
Bessent criticized the EU-India trade deal announced last week, calling it an
India maintains its "India First" energy policy despite U.S. pressure. New Delhi prioritizes affordable fuel for 1.4 billion citizens and resists being pressured into energy choices that would raise domestic costs.
A proposed Congressional bill threatens 500% duties on countries importing Russian oil, intensifying pressure on India. However, Bessent's hints at relief suggest the Trump administration may negotiate rather than escalate further.
Industry analysts predict India will maintain baseline Russian crude purchases through 2026 while diversifying to Middle Eastern and Venezuelan suppliers. The country's refiners seek best prices and margins, balancing U.S. concerns with economic realities.
Bessent told Politico at the World Economic Forum.
The coming weeks will determine whether Washington and New Delhi can reach a trade deal. If India maintains reduced Russian oil purchases, tariff relief could reshape U.S.-India relations and ease pressure on Indian exporters across multiple sectors.
Do You Know?
Before Russia's Ukraine invasion in 2022, Russian crude made up just 2-3% of India's refinery feedstock. Within months, heavy U.S. sanctions pushed that share to 18-19%, creating massive profits for Indian refiners processing cheap discounted barrels.
Key Terms
• Russian Oil Price Cap Policy: International agreement limiting the price buyers pay for Russian crude; designed to reduce Moscow's war funding while allowing energy trade to continue
• Tariffs: Import taxes imposed by the U.S. on Indian goods; the 25% specifically targets countries buying Russian energy
• Jamnagar Refinery: World's largest oil refinery complex operated by Reliance Industries in Gujarat, India; processes crude into fuel and petrochemicals for global markets
• OFAC Sanctions: U.S. Office of Foreign Assets Control restrictions preventing American companies and allies from conducting business with sanctioned Russian entities
• Reciprocal Tariffs: Trump administration policy of matching other countries' tariff rates on American goods with equal U.S. tariffs on their exports
Image from Wikimedia Commons