Assessment of the impact of additional 25% duties on exports of Indian goods to the United States to India’s strategic trade choice
Facts
US President Donald Trump imposed 50% duties on imports of Indian goods to the United States in two installments this summer:
On July 30, he imposed 25% “reciprocal” duties on imports of Indian goods to the United States, similar to duties on imports of goods from almost all other countries. These duties began to be charged on August 1.
On August 6, he imposed additional duties of 25% on imports of the same goods, citing existence of trade between Russia and India, especially in terms of Russian oil and weapons supplies to India.
Trade between India and the United States in 2024 amounted to 11.1 trillion INR / 12.3 trillion RUB / 488 billion AED / 953 billion CNY, of which 7.3 trillion INR / 8.1 trillion RUB / 321 billion AED / 629 billion CNY were exports of goods from India to the United States, and 4.2 trillion were imports of goods from the United States by India. As usual, the United States has a severely negative trade balance with India.
The main Indian goods supplied to the USA:
Electronics and electronic equipment. Significant share of gouds under this export category is Indian production by companies, which are owned by the United States or controlled by the United States.
Precious stones and metals, jewelry.
Pharmaceutical products.
Energy engineering products.
Mineral fuels and petroleum products.
Products made of iron or steel.
Textiles and clothing.
Vehicles.
Organic chemicals.
Seafood.
For India, the United States is the second trading partner with an 18% share in exports. The USA supplies the following goods to India:
Mineral fuels, oil and products. The United States is trying to further increase the supply of its oil, LNG and LPG to India. Earlier, they successfully banned India from buying Iranian and Venezuelan oil.
Precious stones and metals.
Energy engineering products.
Airplanes, spacecraft.
Electronic and electrical equipment.
Medical, optical technical equipment.
Plastics.
Fruits, nuts, citrus fruits.
Organic chemicals.
Since November 2024, the United States has launched an attack on Indian businessman Gautam Adani, who is one of the richest people in the world. The Adani Group does not have significant assets in the oil industry, but it has leading positions in the Indian gas industry, power industry and seaport management.
Earlier, the EU imposed “sanctions” against Nayara Energy, which manages the Vadinar refinery with a processing capacity of 17.3 million tons of oil per year (47 thousand tons per day). This company and its refineries are owned by Russian investors, one of which is the state-owned Rosneft (49.13%). The company faced a number of operational problems after the introduction of EU “sanctions”, including:
Refusal of banks, including local Indian ones, to execute payments from and to Nayara Energy.
The refusal of some shipping companies to work with companies, including the transportation of oil to refineries and the loading of petroleum products from the plant.
Blocking by Microsoft and other Western IT companies significant part of the company's IT infrastructure.
The departure of a part of the management with EU passports, including CEO Alessandro Des Dorides.
The trade turnover between India and Russia in 2024 amounted to 5.9 trillion INR / 6.5 trillion RUB / 258 billion AED / 504 billion CNY. Supplies of Russian goods to India amount to 5.2 trillion INR / 5.7 trillion RUB / 226 billion AED / 442 billion CNY trillion rubles. The basis of Russian exports is oil supplies (3.9 trillion INR / 4.3 trillion RUB / 171 billion AED / 333 billion CNY trillion rubles, which is 76% of total exports). Supplies of petroleum products, coal, coke, and fertilizers are also significant. Goods worth 0.8 trillion rubles (mainly pharmaceuticals and telecommunication equipment) were imported to Russia.
As of 07.08.2025, India has not imposed retaliatory duties, but is actively holding and organizing meetings within the framework of the BRICS to coordinate the response of all countries of the bloc to the US duties. State-owned Indian refineries have announced a temporary reduction in future new purchases of Russian oil. However, current supplies continues to discharge at an average pace of recent years. Main volumes of Russian oil go to private refineries such as Reliance Industries and Nayara Energy.
We will try to make a scenario analysis of the further development of events.
Scenario 1. India's assertion of economic sovereignty
In one extreme scenario of asserting sovereignty, India would impose retaliatory duties on all exports from the United States. Just as her friends and colleagues in BRICS, Brazil and China, did. This will lead to further tariff increases, as we saw at the beginning of the year in the case of China. This, in turn, will lead to a temporary or permanent suspension of trade between India and the United States.
From a political, commercial, financial and economic point of view, India is ready to live without the United States. There will be sectors of the economy that will only benefit from India's turn towards BRICS and life without looking at the United States. First of all, these are the basic sectors of economy: energy, the oil industry, agriculture. But there will also be victims - primarily IT and microelectronics.
India will face the task of compensating for losses from the loss of the US export market.
Russia can additionally open its markets to Indian goods (transport engineering products, pharmaceuticals, textiles), replace supplies of goods from the United States to India (energy engineering products, gold, diamonds), and further increase the supply of discounted energy resources to India. In other words, India will be able to take the entire remaining oil flow, including volumes as a result of the increase in production quotas under OPEC+.
Additionally, India may start importing Russian LPG and LNG. India is one of the key markets for LPG and is extremely sensitive to the price of this social commodity. Liquefied natural gas from Arctic LNG-2 at a reasonable price can be attractive to both the Russian and Indian sides at the same time.
Strategic cooperation between the Russian and Indian sectors in the field of IT and microelectronics is possible. In this case, India will switch from a model of outsourcing services and contract manufacturing from the United States to a model of creating its own companies and industries and integrating markets within the framework of the BRICS. The US blocking of Energy Nayara's IT solutions may become a precedent from which this cooperation can begin.
Iran and Venezuela will be able to resume supplies of oil and petroleum products to India if India decides on a trade and political war with the United States. This will be especially important for Iran due to the territorial proximity of the two countries.
In total, these measures can compensate for the loss of profits from a decrease in the size and marginality of exports of Indian goods to the United States. For Russia and especially its oil and gas industry, the implementation of this scenario will be an unprecedented surprise beyond the most optimistic forecasts for this year.
Scenario 2. India's subjugation to the United States
In another extreme scenario of agreeing to the economic and political subordination of the United States, India will refuse to supply Russian oil and weapons. By analogy with how it refused to supply once very significant supplies of Iranian and Venezuelan oil and petroleum products. The United Kingdom, the EU, Indonesia, Cambodia, Vietnam, the Philippines, Japan, South Korea, and Taiwan Province of China followed a similar path of obeying the will of the United States and agreeing to unilateral tariffs.
Even in this case, India will have to pay at least 25% duties on all its exports to the United States, which will be very painful for the Indian industry.
Trump's additional requirement is to open the Indian market to agricultural products from the United States. This will directly affect Indian farmers. Peasants make up a significant part of Prime Minister Narendra Modi's electorate - over 500 million people in India work in agriculture.
This tactic will avoid direct confrontation with the United States, but it will enslave India for many years, and for Modi it will probably be political suicide. The Russian refinery in India, Nayara Energy, is likely to temporarily suspend its operations and is highly likely to be taken away from Russian owners. India's richest family, Ambani, which owns the world's largest Jamnagar refinery with a refining capacity of 61.7 million tons per year (169 thousand tons per day), will also suffer. It is worth recalling that Trump demands to abandon not only oil, but also supplies and probably joint production of Russian weapons in India. This aspect is no longer an issue of economics, but of national defense. This is especially true after the recent Pakistan-India war.
For Russia, the implementation of this scenario will be catastrophic and will reduce the total volume of oil exports. We will live, but worse. There are only three countries which imports Russian oil by sea: India (89 million tons in 2024), China (62) and to a lesser extent Türkiye (19).
Türkiye is already flooded with Russian oil and will obviously be Trump's next target. It is also worth noting that a third of Russian oil import in Türkiye are processed by SOCAR.
Redirecting supplies to China will increase already huge transportation costs, as well as increase discounts on all Russian oil in Chinese ports. So China alone is not good for Russian export.
Further developments
Under Trump's pressure, economic and financial world is rapidly moving towards a split between the Global North and the Global South. You need to chouse your side. Indian bureaucracy and diplomacy do not like haste and fuss, but the introduction of 50% duties requires the Indian government to take quick and concrete steps. Obviously, the decision on the country's trade future will be made personally by Narendra Modi.
It is worth noting that there is no fundamental difference between 25% duties, coupled with a public violation of Indian sovereignty, and 50% duties on trade with Russia for India. Probably, the very fact of additional 25% duties will affect India's reaction. This whole tariff story has nothing to do with Russia and depends only on Trump's desire to take taxes from the relatively poor (almost the whole world) to support the rich (US citizens). A kind of reincarnation of the Roman Empire in the New World.
It remains to be believed and hoped that Modi will continue to strategically defend India's national sovereignty and put the interests of the local economy first. As Trump himself does. The same way China successfully managed to resist these tactics of tariffs and intimidation of China's trading partners.
