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• India-US trade agreement announced
• A break on Russian oil due to US conditions?
• India will have a burden of $9-12 billion

India–US Trade Deal: A trade agreement has been announced between India and the US. After his talks with Prime Minister Narendra Modi, US President Donald Trump has claimed that the US has directly reduced the 50% tax imposed on India to 18%. PM Modi has also thanked Trump after this agreement. This landmark agreement is linked to India’s decision to stop buying oil from Russia. Now, the big question is how much India will have to pay if it stops importing oil from Russia and how expensive American oil will become for India.

According to reports, after lengthy negotiations, India and the US have agreed on a historic trade deal. Under this, the 25% tax imposed on Indian exports has been reduced to 18%. The agreement was reached after direct talks between Prime Minister Modi and President Trump. According to reports, the agreement is directly linked to India’s agreement to reduce oil imports from Russia and increase purchases of energy products from the US.

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So far, Russian oil has been very cheap for India. In 2024, approximately 36 percent of India’s total crude oil imports came from Russia, which was approximately 1.8 million barrels per day. When Russian President Vladimir Putin visited India in December last year, he promised to continue uninterrupted oil supply to India despite US pressure. Russia is supplying crude oil to India at discounted rates. In comparison, buying oil from the US can be very expensive for India, as it has to pay international market rates. Additionally, due to the long distance, transportation and insurance costs will be high. India could face 5 to 10 per cent higher costs per barrel, which would result in an additional burden of billions of dollars.

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So far, India has been buying Russian oil at $50-55 per barrel. Even after the US sanctions, including transportation and insurance, the price remained limited to $62-65 per barrel. If calculated on an annual basis, India’s total oil import bill could be burdened by an additional $9-12 billion depending on the amount of oil imported from the US. Oil prices range between Rs 600-1200 per barrel. may vary up to, which will cost the country additional crores of rupees. Rising oil prices are expected to push up inflation and put pressure on government subsidies.

Since 2022, Russia has been selling oil to India at a huge discount. Despite US sanctions, Russian crude oil was available at around $35 per barrel. Hence India’s oil import from Russia, which was only 2% in 2020, will increase to over 35% by 2025. According to State Bank estimates, if India stops buying oil from Russia, its oil import bill could increase by around $9 billion in the current fiscal year and the burden could go up to $12 billion in the next fiscal year.