On Wednesday, Narendra Modi called Donald Trump to discuss matters on trade, energy and defence. He also reportedly highlighted India's concerns over Lindsey O Graham Sanctioning Russia and Iran Act 2026. Trump signed the sanctions law on Sept 18, giving himself as president substantial authority to impose tariffs up to 100% on major purchasers of Russian energy. The important aspect of the law is that such an imposition will be on presidential 'discretion'.
For India, the question isn't about how many barrels of Russian oil it buys, but whether countries with profoundly different levels of development, economic capacity and strategic relationships with the US should be treated alike. Say, China and India, profoundly different countries, both of which 'do business' with Russia.
This is where, for India, economics meets strategy. India and the US have spent more than two decades building one of the world's most consequential strategic relationships. Trump and Modi have described the US-India Comprehensive Global Strategic Partnership in terms of mutual trust, shared interests and goodwill. Ambassador Sergio Gor expressed the principle well: 'Real friends can disagree but always resolve their differences in the end.' The Russian oil question provides an opportunity to demonstrate that principle.
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India's continued purchase of Russian oil should not be mistaken for indifference - either by GoI or India's people - to the suffering caused by Russia's war on Ukraine. But an elected government must also consider the hardship that significantly higher energy costs can impose on its own citizens.
None of this diminishes Washington's legitimate strategic objective of reducing revenues available to Russia to sustain its war in Ukraine. But it raises another important question: who should bear the economic cost of achieving that objective?
There may be a fairer way forward. If Washington wants New Delhi to substantially reduce Russian oil purchases, the US and India could explore an arrangement under which alternative supplies - including US crude - reach India at a landed cost comparable with the Russian oil being displaced. Such a request would, then, become economically much easier for New Delhi to accommodate. If India is being asked to alter its energy sourcing in pursuit of a shared geopolitical objective, the incremental economic cost need not fall disproportionately on the Indian people.
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That is the central issue. Energy affordability in India is not simply about protecting corporate margins, or headline GDP. It directly affects the country's ability to move hundreds of millions of people towards economic security.
There is also a strategic relationship at stake. India-US cooperation today encompasses defence, critical technologies, semiconductors, AI, resilient supply chains, counterterrorism and the Indo-Pacific. The two countries are simultaneously seeking deeper trade and investment ties, and more resilient and trusted supply chains.
The question for Washington, therefore, is larger than Russian crude: what combination of pressure, incentives and alternative energy supplies best advances US objectives without imposing disproportionate developmental costs on India, or damaging a strategic relationship built over decades?
A tariff potentially reaching 100% is an extraordinarily powerful instrument. Its consequences would extend far beyond the oil trade. And a strategic relationship is not really tested when interests coincide. Its durability is tested when they diverge.
India and the US will disagree from time to time. They are two large sovereign democracies, each pursuing its own national interests. With the Lindsey O Graham Sanctioning Russia and Iran Act, Trump wields considerable discretion. Using that discretion should involve looking beyond the immediate question of where India buys a barrel of oil. It should also involve considering India's level of development, economic consequences of today's exceptionally high energy prices, and strategic value of a trusted relationship that both countries have spent decades constructing.
The challenge is to ensure that a disagreement over Russian oil does not obscure the much larger question of where India and the US want their relationship to be 20 yrs from now.
The writer is founder & managing partner, Saraf & Partners.
