India has rightly pushed back against North Atlantic Treaty Organization (NATO) secretary general Mark Rutte’s warning this week that countries like India, China, and Brazil could face secondary sanctions if they continue doing business with Russia. Threatening a sovereign nation for prioritising its economic interests, especially when Western countries have historically done the same, reeks of hypocrisy. One cannot but agree with the government’s view that strategic autonomy in energy policy is non-negotiable, even amid shifting geopolitical equations. India has also done well to point out the “double standards”, in a possible reference to the fact that European Union members continue to procure oil, liquefied natural gas, and pipeline gas from Russia despite the sanctions, and are also major buyers of processed products that go through Indian refineries, including Nayara Energy in which Russia’s ROSNEFT has minority control.
Sanctions Rhetoric Heats Up
Rutte’s crude threat is understandable as it comes amidst a large number of US senators, cutting across party lines, backing a new sanctions Bill proposing a 500% tariff on nations buying Russian goods. President Donald Trump, too, said this week that the US would impose 100% secondary tariffs targeting Russia’s trade partners if a peace deal with Ukraine did not happen in 50 days. One hopes this is yet another empty threat by the mercurial Trump. For, things will indeed be difficult for countries like India if he carries through with his threat. This is because secondary tariff will apply to the country and affect all merchandise exports, unlike in the case where only the entities doing business with sanctioned Russian entities are penalised. India’s trade with Russia has significantly increased, reaching a record $68.7 billion in 2024-25, driven mainly by oil imports.
Limited Alternatives, Rising Costs
Oil minister Hardeep Singh Puri was at his optimistic best on Thursday when he said that India can easily meet its oil needs from alternative sources even if Russian supplies are hit by secondary sanctions. He noted there were many new suppliers coming into the market such as Guyana and supply from existing producers such as Brazil and Canada. The minister also said India has diversified the sources of supply from about 27 countries earlier to about 40 countries now. But the harsh reality is Indian refiners will have no other way than pivot towards its traditional West Asian suppliers to make up for lost Russian supplies. These new barrels will, however, come at a much higher cost—ranging between $4 and $5/barrel, pushing up the country’s import bill by a huge margin.
India, the world’s third-largest oil importer and consumer, received about 1.75 million barrels per day (bpd) of Russian oil in January-June this year, accounting for about 35% of the country’s overall supplies. In June, India’s Russian oil imports rose 17.4% to about 2 million bpd from the previous month. Indian refiners are likely to tank up on cheap Russian oil during the deadline period the way they had done during the Israel-Iran conflict while tying up alternative supplies. But that’s only a short-term solution. The US and NATO move is intended at choking Russia further as fossil fuels are a very big part of that country’s GDP. That’s why Trump has sought to checkmate Putin through secondary tariffs on his major oil buyers. The short point is that plugging the Russian pipeline is bound to drive up oil prices, creating further headache for oil import-dependent countries such as India. Besides, such sanctions could derail India-US talks for a trade deal.