Here’s why there is no correlation between India’s move to cut Russian oil imports and impending US trade deal

Does the decision of Indian refiners, both private and state-owned, to move away from Russian seaborne crude owing to Western sanctions on Moscow’s energy giants indicate that India is throwing in the towel? Will this ‘shift’ finally pave the way for a slash in tariffs and a trade deal with the United States? Not so fast. Let me explain.

Allow me to take you to Germany where Piyush Goyal, the Union minister of commerce and industry, made some interesting comments on Friday while taking part in the Berlin Global Dialogue.

At a time when the Trump administration has imposed sweeping new sanctions on Russian oil giants Rosneft and Lukoil to ostensibly force India to scale back its imports of Russian crude, Goyal told a global audience of German and British politicians, ministers, CEOs and EU trade representatives that India won’t sign any trade deal in a hurry.

On the tariffs inflicted on India by the US and looming pressure to sign the deal, Goyal said, “we are talking to the United States, of course, but we don’t do deals in a hurry. And we don’t do deals with a deadline or with a gun on our head…”

When it was suggested that deadlines and pressure tactics may have become part of trade negotiations, Goyal said India prefers to take the long view. “India looks long term… India never takes decisions in a rush or on the pressure of the moment. We have accepted there’s a tariff on us… We are looking at how to overcome that, we are looking at newer markets, and we are looking at a stronger demand impetus within the Indian economy. So, we have a very resilient structure.”

This does not sound very submissive. The minister’s comments, in fact, go against the grain of the increasingly prevailing narrative that the Trump administration has been successful in its strategy of forcing India to bend to its will by using tariffs, and ultimately, India has submitted to the lure of American market by letting go of Russian crude.

India’s defiance suggests otherwise. The words of Goyal, who is spearheading trade talks from the Indian side, carry added significance. The minister, while posting the interaction on social media, highlighted the word ‘TRUST’.

His point was simple. Trade deals do not magically create trust. These are borne out of trust. As he said in Berlin: “Trade deals are for a longer duration. It’s not only about tariffs, it’s also about trust and a relationship.”

To understand the minister’s point, we need only to look at Canada. Going past the mistrust and animosity of the Justin Trudeau years when bilateral ties tanked and both sides expelled diplomats in a tit for tat move, India is trying forge a closer partnership, and in Prime Minister Mark Carney it has found a willing partner. India has invited the Canadian PM early next year to open negotiations on a “comprehensive economic and free trade partnership.”

Goyal is signalling to the US that rather than using coercive tools, Washington should work to restore trust in the relationship to bring the deal to fruition. On being asked if India is getting a ‘fair deal’ that is conditional, the minister said: “I do not think India has ever decided who its friends will be based on any other considerations other than national interest… and somebody tells me you can’t be friends with the EU, I won’t accept that or somebody tell me tomorrow, I can’t work with Kenya, it’s not acceptable.”

In a spectacular exchange with UK trade minister Chris Bryant (seated next to Goyal) that exposes the hypocrisy of the West, Goyal pointed out the double standards over the sanctions on the Russian oil firms. While Indian refiners are being threatened with secondary sanctions if they continue to source oil from the sanctioned Russian firms, Germany is already moving fast to secure relief for three of its subsidiaries of Rosneft from the Trump administration, having already secured exemption from the UK.

Goyal asked Bryant why is India being “singled out”? The UK trade minister replied that Germany’s case pertained to a specific subsidiary in relation to Rosneft. When Goyal pointed out that India also had a subsidiary of Rosneft (Nayara Energy) that has been sanctioned by the UK, Bryant said, “Well, come and talk to us…”

What should we glean from Goyal’s interaction in Berlin? There is no direct correlation, as is being suggested, between India’s cutting of oil sourced from Russia and chances of signing a trade deal.

In other words, the decision of India’s stated-owned and private firms to shift away from Russian oil and look for other sources has less to do with the fact that New Delhi is desperate for a trade deal with Washington, and everything to do with the fact that trading with sanctioned firms make Indian refiners vulnerable to secondary sanctions.

Indian refiners have historically stayed away from trading with sanctioned entities. That’s why India complies with US-imposed sanctions on Iranian and Venezuelan crude – even though these come cheaper than other sources. Russian seaborne crude, so far, was price-capped, not sanctioned. The Biden administration allowed Russian crude to flow freely to calm down global crude prices, while subjecting it to a price-capping mechanism to shave off Russia’s gains. It also encouraged India to pick up the cheaper oil.

Before October 25, despite imposing 25% additional tariffs on India for buying Russian oil, the Trump administration had kept the mechanism unaltered. So long as it was economically profitable, Indian state-owned and private refiners maintained the flow of Russian oil, even though state refiners had been shifting away. State-run companies such as including Indian Oil, Bharat Petroleum, and Hindustan Petroleum cut their Russian oil imports by 45% from June to September 2025, reducing volumes from 1.1 million barrels per day in June to approximately 600,000 bpd in September.

However, private refiners stepped in. Reliance and Nayara Energy offset the reductions by significantly increasing their Russian crude purchases, with Reliance doubling its intake to 850,000 bpd and Nayara Energy reaching nearly 400,000 bpd in September. The tempo was carried forward and even surpassed in October. Data from Kpler, that provides real-time data for global commodity and shipping markets, indicate India’s imports are reaching approximately 1.8 million bpd, representing an increase of approximately 250,000 bpd from September’s 1.6 million bpd.

This data proves that India’s energy policy was dictated by its requirements, national interest, economic necessity, and a pragmatic reading of the global energy landscape. This was also an expression of India’s autonomy, because India continued buying despite persistent and significant Western pressure. It willingly took reputational damage to ensure energy security for its people.

If folding before US pressure was all that it took for India to get that trade deal and shake off the punishing tariffs, India could have done that much earlier. It makes no sense for India to fold now, unless the underlying economic reason behind sourcing Russian crude is affected.

If these sanctions, coordinated by the US and its allies, are enforced in letter and spirit, then it carries little logic for India to continue buying Russian oil. Buying from sanctioned entities such as Rosneft or Lukoil may invite biting secondary sanctions.

These penalties may include exclusion from the US financial system, denial of access to international banks, blocked foreign currency transactions, insurance bans, and even restrictions on purchasing vital refining equipment or technology from Western suppliers. Any global transactions involving US dollars, major insurance or shipping firms, or financing routed through Western institutions could be frozen, severely disrupting business for global players.

India can, of course, still exercise its strategic autonomy but it will now come with a heavy price along with the reputational damage.

This cost-benefit calculus lies at the heart of India’s decision to pare down its Russian oil intake, a move replicated by China , whose state-owned oil majors have suspended purchases of seaborne Russian crude, reports Reuters.

It will be unwise to link it to the impending trade deal between India and the US, that lies in limbo due to acute trust deficit between both sides. Consider that even though New Delhi has indicated that it will comply with the sanctions and sharply cut Russian crude import, both sides are still jousting over the deal. On the other hand, Goyal’s words that India will decide on its friends solely on national interest and not bow down to external pressure, indicates that the relationship with Russia will continue.

One more point needs to be considered. While Trump claims that his imposition of sanctions are aimed at bringing the war to an end and force Putin to the negotiating table, the reality is that these sanctions are bargaining chips for Trump in his effort to strike advantageous trade deals with India and China. Had that not been the case, the sanctions wouldn’t have been designed in a way so as to allow Europe a comfortable grace period to wean itself off Russian energy.

American sanctions, along with EU’s ’19th package’ enact a carefully laid phased ban on Russian LNG by 2027. A transaction ban on major Russian oil firms such as Rosneft and Gazprom will kick off immediately for new contracts, but existing long-term contracts will wind down over several years.

There’s one more aspect. As New York Times observes, “Russia had become adept at evading restrictions by using a fleet of hundreds of old vessels uninsured by Western companies and by conducting transactions through buffer companies in third countries. And because Russia accounts for about nine percent of global oil sales, any restrictions against its exports would cut supply and push prices up, creating incentives for further sanction evasion.”

As Russian crude moves further into the shadows via its vast network of ageing tankers – 69% of Russia’s seaborne crude exports were carried on “shadow fleet” tankers, reports Reuters – the weaponization of tariffs may backfire. It certainly won’t be pressing enough for a sovereign, proud nation such as India to settle for pliant deals.

Therefore, as long as the deal remains inconclusive, it is prudent for the Prime Minister to avoid meeting Trump personally who might use the occasion to repeat his claims of “stopping” India-Pakistan war, or pick up some other incendiary topic, forcing Modi to contradict him before the cameras. It may create even more discord in bilateral ties and bruise Trump’s fragile ego. This is not in India’s interest. A meeting between the two principals at this stage, therefore, carries no gains for India.

Trump wants precisely such opportunities. He plays little games throwing diplomatic protocol to the wind and may press ahead with his trade agenda to set the terms and secure a headline ‘wins’. For an equitable deal that benefits both sides, it is better for India that negotiators do their work and thrash out the minute details before an agreement is arrived at. The leaders should meet precisely at that juncture and not earlier.

Modi is taking a long view of the relationship. This is reflected in India’s calmness and restraint despite relentless provocation from the other side, and in keeping with that strategy, avoiding Trump and wearing down his aggressive tactics with responsible diplomacy is the correct approach.

The writer is Deputy Executive Editor, Firstpost. He tweets as @sreemoytalukdar. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.