New Delhi: India will restrict crude oil purchases from Russia under an understanding reached with the United States (US) to secure lower trade tariffs, sources said, adding that refiners will continue lifting contracted volumes but will not place new orders going forward. The development follows an announcement by US President Donald Trump, who said the United States will cut reciprocal tariffs on Indian goods to 18 percent from 25 percent with immediate effect under a broader bilateral agreement.
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According to Trump, the tariff reduction came after India agreed to stop buying Russian oil, lower tariff and non-tariff barriers against the US, and commit to purchasing an additional USD 500 billion worth of US energy, technology, agricultural products, coal and other goods over time.
The understanding removes an additional 25 percent punitive tariff imposed earlier over Russian oil purchases, effectively lowering the applied US tariff on Indian exports to 18 percent from 50 percent, providing relief to exporters.
Indian refiners, which emerged as the world’s second-largest buyers of Russian crude after Moscow’s invasion of Ukraine in February 2022, will continue to honour purchase commitments made prior to the announcement but will refrain from placing new orders, three sources familiar with the matter said.
State-run refiners such as Hindustan Petroleum Corporation Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL) and HPCL-Mittal Energy Ltd had already stopped buying Russian oil after the US last year imposed sanctions on key Russian exporters, the sources said.
Others, including Indian Oil Corporation(IOC) and Bharat Petroleum Corporation Ltd (BPCL), will gradually wind down purchases.
Reliance Industries Ltd (RIL), India’s largest buyer of Russian crude, which paused purchases late last year after US sanctions on Rosneft and Lukoil, is also expected to stop buying after delivery of a resumed cargo of 100,000–150,000 barrels.
The only likely exception is Nayara Energy, which was sanctioned first by the European Union and subsequently by the UK due to its Russian ownership links, with Rosneft holding a 49.13 percent stake.
Because of these sanctions, other major crude suppliers are unwilling to transact with Nayara, forcing it to source oil from non-sanctioned Russian entities. Sources said Nayara is likely to continue such purchases in the near term.
The company’s position was explained to US trade officials during talks in December, they added, and Nayara may need an exemption or special dispensation under the no-Russian-oil understanding.
Trump said India’s reciprocal tariffs will now be set at 18 percent, marginally below the 19 percent imposed on most ASEAN economies, excluding Singapore, and lower than the 20 percent tariff on Bangladesh. The additional 25 percent tariff linked to Russian oil will be removed following India’s reported commitment to stop purchases.
India has also agreed to import USD 500 billion worth of US goods, including energy, agriculture and technology products, over five years.
In 2025, India exported USD 92 billion worth of goods to the US, accounting for 20 percent of total exports, while imports from the US stood at USD 50 billion, or about 7 percent of total imports. India imported USD 180 billion worth of crude oil that year, with Russia accounting for roughly 30–35 percent, compared with 20–30 percent from Iraq, 15 percent from Saudi Arabia, 10 percent from the UAE and 5–10 percent from the US.
Sources said India’s Russian crude imports have been declining since US sanctions on Rosneft and Lukoil came into force. Imports averaged about 1.2 million barrels per day in December 2025, down from a peak of 2.1–2.2 million barrels per day, and fell further to around 1 million barrels per day in January.
“With the new understanding with the US, the imports may halve soon,” a source said.
However, market analysts said a sharp near-term decline is unlikely. According to Sumit Ritolia, Lead Research Analyst, Refining and Modeling at Kpler, the India–US trade deal is unlikely to immediately reduce Russian crude inflows.
“Russian volumes remain largely locked in for the next 8–10 weeks and continue to be economically critical for India’s complex refining system, supported by deep discounts on Urals relative to Brent. Imports are expected to stay broadly stable in the 1.1–1.3 million barrels a day range through Q1 and early Q2,” he said. “Despite a recent moderation in purchases, India is unlikely to fully disengage in the near term.”
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Prashant Vasisht of ICRA said the reported trade deal also envisages higher purchases of US crude and potential imports from Venezuela.
“For the Indian refining sector, there are ample avenues including the US, to purchase crude as Russian crude accounted for less than 2% of Indian crude imports prior to FY2023,” he said.
Vasisht added that replacing Russian crude with market-priced alternatives would increase India’s import bill by less than 2%, while Venezuelan heavy and sour crudes could offer cost-effective alternatives for Indian refiners capable of processing such grades.