Strategic Autonomy on the Line: India's Energy Balancing Act
India stands at a challenging crossroads. Repeated threats of sanctions from the U.S. and EU over its oil imports from Russia have materialized with the EU's imposition of restrictions on India's second-largest oil refinery. Simultaneously, a proposed trade deal between the U.S. and India failed to materialize by the July 30th deadline, and a bill introduced in the U.S. Senate, proposing a 500% tariff on countries importing Russian oil, casts a long shadow over India's energy security. With nearly half of its oil now sourced from Russia, India may be forced to choose between economic pragmatism and geopolitical alignment.
But is this truly a binary choice? Or does India still have room to maneuver through diplomacy, diversification, and deeper strategic thinking?
India's oil imports from Russia have been driven by cost and continuity. Since early 2022, Russian oil trading at a $7-8 discount compared to Middle Eastern crude has helped India shield its economy from energy-driven inflation. According to an ICRA report covering the period from April 2024 to February 2025, India saved approximately $7.9 billion on its oil import bill by purchasing discounted Russian crude, a notable increase from $5.1 billion in the previous fiscal year.
Yet in Washington, this pragmatic calculation is viewed through a geopolitical lens. The draft 'Sanctioning Russia Act of 2025,' sponsored by Senator Lindsey Graham, seeks to globalize America’s war priorities by penalizing countries that do not align with its sanctions regime. For India, however, strategic autonomy has never meant passive neutrality. It signifies independent policy calibration guided by long-term national interests rather than transient external pressure.
While New Delhi has publicly avoided direct confrontation, Indian officials have quietly engaged with U.S. lawmakers to explain the rationale behind continuing Russian oil imports. External Affairs Minister S. Jaishankar's comment that India will 'cross the bridge when it comes' has drawn varied interpretations, with some viewing it as calculated ambiguity, others as a strategic placeholder. Either way, it reflects a diplomatic posture designed to maintain flexibility amidst intense external pressure.
India has often purchased Russian oil below the G7-imposed price cap of $60 per barrel, enabling continued access to Western shipping and insurance services. Yet, New Delhi maintains that it is not formally bound by the cap and that its energy trading decisions are guided by national interest, not alignment with unilateral Western sanctions.
However, with growing support for the bill in the U.S. Senate, India's diplomatic space may shrink, with mounting pressure to demonstrate explicit support for Ukraine or face the threat of severe economic consequences. To prevent escalation, India may need to fortify its position with a blend of strategic messaging, confidence-building signals, and readiness for adaptation, without appearing coerced. It’s a fine diplomatic line, but one that India is uniquely equipped to walk.
A Tariff That Spreads Beyond Oil
The proposed tariff isn't just an energy tool; it's a trade weapon. India's annual exports to the U.S. total $80-90 billion. Imposing a 500% levy would cripple key sectors like pharmaceuticals, engineering goods, auto components, and textiles, many of which are indirectly linked to oil-derived inputs.
Analysts believe a significant portion of India's exports to the U.S., particularly in energy-intensive sectors such as chemicals, metals, electronics, and auto components, could face disproportionate damage under such a tariff regime.
This raises a critical question: can strategic partnerships coexist with economic coercion? If India is penalized for securing affordable energy, the credibility of broader U.S.-India cooperation in the Indo-Pacific, defense, semiconductors, and technology sectors will be undermined. The risk is that strategic pressure today could erode structural trust tomorrow.
Strengthening Energy Defenses
Therefore, India must prepare on multiple fronts. While diplomatic engagement in Washington continues, it must also strengthen internal safeguards to manage potential shocks. This includes accelerating the diversification of oil sources, particularly from Gulf producers and Africa, and expanding strategic petroleum reserves (SPR), which is already under government consideration. Equally important is fast-tracking the clean energy transition to reduce the economy's overall oil intensity and long-term vulnerability.
Legal instruments could also be brought into play. India has invoked the WTO mechanism, seeking consultations on U.S. auto tariffs and proposing retaliatory duties on steel and aluminum—steps it has clarified won't disrupt ongoing trade talks. Yet, any legal response must be tempered to avoid escalation. Past experience cautions restraint: the 2016 U.S.-India solar panel dispute brought eventual compliance but only limited short-term relief, with India terminating the contested policies years after the initial ruling. WTO adjudications, while principled, often yield results too slowly to alleviate immediate economic pressure.
The Balancing Act
India's choices today will resonate not only in Washington but also in Moscow. Russia has long viewed India as a reliable strategic partner in defense, energy, and space. If India appears to reduce Russian oil imports under U.S. pressure, it could invite repercussions: more expensive contracts, tighter financing, and reduced leverage in bilateral negotiations. More fundamentally, it could potentially erode the political goodwill that has long underpinned their steady relationship.
Yet, both India and Russia are well aware of the shifting political winds in Washington. With the 2026 U.S. midterm elections looming, and uncertainty surrounding the durability of Trump's congressional support, both countries may prefer to buy time rather than rush into irreversible decisions. A potential electoral upset could undermine the legislative momentum behind the 'Sanctioning Russia Act,' forcing Washington to recalculate its strategy.
Reflecting Russia’s own caution, Deputy Foreign Minister Sergei Ryabkov stated in a TASS interview, 'The Trump administration is very contradictory in its actions and statements. This does not make the work easier.' For India, this moment may be less about confrontation and more about strategic patience, balancing engagement with both powers while safeguarding long-term autonomy.
Yet, continuing to purchase Russian oil in defiance of U.S. law carries risks for India, especially for the delicate but deep U.S.-India partnership. Washington is heavily invested in India's rise through technology transfers, nearshoring, and strategic frameworks like the Quad. The concern is less about immediate sanctions and more about the potential loss of momentum in broader bilateral cooperation.
Strategic Autonomy as the Litmus Test
The 500% tariff threat is more than just a policy lever; it’s a litmus test of India’s economic sovereignty, diplomatic agility, and global posture. India must defend its energy decisions not with defiance, but with deliberate design: through layered diplomacy, structural reforms, and a clear articulation of development-driven rationale. In this context, India isn't choosing sides; it's choosing its ground. It seeks to maintain credible ties with both Washington and Moscow without being drawn into binary alignment. Strategic autonomy in this sense isn't about isolation; it's about balance, resilience, and outcome-sensitive positioning.
If Washington hopes to sustain India as an enduring democratic partner, it must recognize that coercive tactics could prove counterproductive, potentially pushing India toward alternative suppliers and geopolitical alignments, including, if necessary, China, in an effort to insulate itself from future risks.
If America sees India as a true strategic partner, not just a convenient counterweight, it must acknowledge these complexities and demonstrate flexibility. Likewise, if India aspires to rise without external dependence, it must further sharpen its capacity to absorb, deflect, and recalculate in the face of mounting pressure."
(Article by the author at the Observer Research Foundation, with research interest in strategic energy insights and green transitions. Article courtesy of RT News.)