Why India Must Stick with Russian Oil: Economic Lifeline Amid Global Pressures.

~Suman Mukhopadhyay 

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With Donald Trump administration ramping up tariffs and diplomatic pressure on India to curb discounted Russian crude imports, New Delhi faces a blunt reality: the economy cannot afford to yield. Since Russia’s 2022 invasion of Ukraine, Indian refiners have snapped up cheaper Russian barrels, cutting import bills and sustaining growth in a country consuming over 5 million barrels per day. 

Turning away now would hurt national interests, jolt key sectors, drive up global energy prices, and drain foreign exchange reserves.

A Discounted Lifeline for a Fast-Growing Economy:

India is the world’s third-largest oil importer, spending $150–200 billion annually on crude. Energy costs are pivotal for sustaining 7% GDP growth. Russian oil—barred in the West but flowing steadily to India at $3–4 per barrel discounts on grades like Urals—has become a game-changer.

In August, imports hit record highs, with September projected to rise another 150,000–300,000 barrels per day. Far from opportunism, this is economic prudence. Government data shows India saved $10–12 billion in forex last fiscal year, cushioning inflation-hit sectors.

🔹Agriculture: Fertilizer costs, tied to oil benchmarks, stayed lower. Without discounted crude, fertilizer prices could have spiked food inflation by 5–7%.

🔹Manufacturing: Petrochemical output—from plastics to textiles—remained competitive, helping exports amid global disruptions.

🔹Energy: Stable oil prices eased power costs, keeping industrial tariffs manageable.

Effectively, Russian oil acts as a strategic subsidy. Redirected savings fund infrastructure projects and social programs, multiplying economic benefits. Abandoning it could shave 0.5–1% off GDP growth in an election-sensitive year.

The Triple Cut-Off Risk: Oil Shockwaves:

Indian negotiators have warned Washington: cutting off supplies from Russia, Venezuela, and Iran simultaneously would ignite global chaos. Together, these sources account for nearly 20% of global crude. India alone sources about 40% of its supply from them.

Analysts project Brent prices could surge 20–30% toward $100+ per barrel, as OPEC+ lacks sufficient spare capacity. For India, that means an extra $40–60 billion in annual import costs, higher diesel prices (15–20%), and a 2–3% inflation spike. The RBI would be forced to hike rates, hitting SMEs and exports.

Globally, U.S. voters would face $4/gallon gasoline—a political landmine. The Trump White House risks boomeranging its own strategy, while emerging markets like India and Indonesia absorb the worst shocks.

Forex Advantage: The Ruble Route:

Critics point to U.S.–India trade as leverage, but the numbers don’t match the rhetoric. U.S. exports form just 18% of India’s outbound trade, while Russian oil discounts deliver $100+ billion in savings.

Much of this oil is now paid for in rupees under Moscow’s alternate payment channels, conserving $20–25 billion in forex reserves and strengthening the rupee. By contrast, U.S. tariffs on steel or textiles dent exports but don’t outweigh the structural gains from Russian energy.

Finance Minister Nirmala Sitharaman put it bluntly: “We will keep buying crude from Russia as it looks to cater to our interests.”

The Bottom Line: Pragmatism Over Pressure:

India’s Russian oil strategy isn’t defiance—it’s necessity. These imports stabilize inflation, protect jobs, and secure growth in a fragile global economy. Washington’s tariff tools won’t alter this calculus. If the U.S. wants reduced Russian flows, it must offer viable alternatives, not ultimatums.

For India, the message is simple: energy security comes first. Continuing Russian crude purchases is not only rational—it is essential for a 1.4 billion-strong nation on the path to Viksit Bharat by 2047.